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13. A $600,000.00 worth of business loan was applied by Basilio from XYZ Bank to expand his poultry business. Suppose he is required by the company to pay this in 5 years, what is the amount to be paid if the effective rate of interest is 8%? a. 746,265.00 b. 881,597.00 C. 895,008.00 d. 924,720.00 I​

Sagot :

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Given:

Loan (P) = P600,000.00

time (t) = 5

rate (r) = 8% = 0.08

Find F.

• As far as we are talking about the effective rate of interest, then we understand, we're talking about compound (not simple) intetest.

So, we use a formula of finding the future value at compound interest:

[tex]F = P(1+r)^{t}[/tex]

Substitute the given data:

[tex]F = 600,000(1 + 0.08)⁵ = 600,000(1.08)⁵[/tex]

[tex]F ≈ P881,596.8[/tex]

Answer: P881,596.80