If you borrow $1,500 at 12.5% interest for three months, how much do I need to repay under a single payment plan

Guest Feb 25, 2017

#1**0 **

If 12.5% is "simple interest", then we have:

12.5/100 x 1,500 =$187.50 - simple interest for 1 year.

$187.50/12 x 3 =$46.88 - simple interest for 3 months.

$1,500+ $46.88 =$1,546.88 - single payment you must repay after 3 months.

If 12.5% is compounded monthly, then we have:

FV =1,500 x [1+ 0.125/12]^3

FV =1,500 x 1.03157665...

FV = $1,547.36 - single payment you must pay after 3 months.

Guest Feb 25, 2017