anonymous
  • anonymous
AJ takes out a small business loan of 15500 dollars at a nominal rate of interest of 7.4 percent convertible quarterly. One year later, he repays 3500 dollars. Two years after that, the bank wants to sell AJ's loan to another institution. How much does AJ owe at that time?
Mathematics
  • Stacey Warren - Expert brainly.com
Hey! We 've verified this expert answer for you, click below to unlock the details :)
SOLVED
At vero eos et accusamus et iusto odio dignissimos ducimus qui blanditiis praesentium voluptatum deleniti atque corrupti quos dolores et quas molestias excepturi sint occaecati cupiditate non provident, similique sunt in culpa qui officia deserunt mollitia animi, id est laborum et dolorum fuga. Et harum quidem rerum facilis est et expedita distinctio. Nam libero tempore, cum soluta nobis est eligendi optio cumque nihil impedit quo minus id quod maxime placeat facere possimus, omnis voluptas assumenda est, omnis dolor repellendus. Itaque earum rerum hic tenetur a sapiente delectus, ut aut reiciendis voluptatibus maiores alias consequatur aut perferendis doloribus asperiores repellat.
schrodinger
  • schrodinger
I got my questions answered at brainly.com in under 10 minutes. Go to brainly.com now for free help!
anonymous
  • anonymous
since it's convertible quarterly you use a compound interest formula using the rate/4. So the amount owed after one year (four quarters), will be: P (1 + r/4)^4 where P = the principal and r = .074
anonymous
  • anonymous
hey md, any luck?
anonymous
  • anonymous
hi, thanks for helping me... i converted the interest as u said but im having trouble to set up the equation..

Looking for something else?

Not the answer you are looking for? Search for more explanations.

More answers

anonymous
  • anonymous
i have it as follows : 15500=3500+x(1.0185)^12 and im solving for x.
anonymous
  • anonymous
hey md
anonymous
  • anonymous
hmmm, well, you're looking for the total amount that is owed on the load after 3 years
anonymous
  • anonymous
after the first year, 15500*(1 - .074/4)^4 is left on the loan
anonymous
  • anonymous
at that time, AJ pays 3500, and you have another equation
anonymous
  • anonymous
... with a new principal. two years after that time, the total amount on the load is: ((15500*(1-.074/4)^4) - 3500) * (1+ .074/4)^8 (since AJ now owes two more years - 8 quarters - at the same rate but new principal)

Looking for something else?

Not the answer you are looking for? Search for more explanations.