Math CentralQuandaries & Queries


Question from melody, a student:

LOAN: 1000
TERM: 2 years
INTEREST: 2% (per month)

what is he formula of solving this and what is the answer..

With compound interest (almost always the case today), at the end of each month you owe what you did at the beginning plus another 2% of that - that is, (1 + 0.02) or 1.02 times what you originally owed. Then after the next month you owe 1.02 × 1.02 × the original amount, and so on.

The general formula is (1+R)N × P where P is the principle, N the number of periods, and R the rate per period.

Good Hunting!

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