SOLUTION: Find the loan's future value A, or the total amount due at time t. P = $3000, r = 6%, t = 3 years

Question 1202294: Find the loan's future value A, or the total amount due at time t.
P = $3000, r = 6%, t = 3 years

Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
if it's a simple add-on interest type loan, the formula is f = p * r * n + p
when p = 6% and n = 3 years, the formula becomes f = 3000 * .06 * 3 + 3000.
solve for f to get f = 540 + 3000 = 3540.

if it's a compound interest loan, the formula is f = p * (1 + r) ^ n.
when p = 6% and n = 3 years, the formula becomes f = 3000 * (1 + .06) ^ 3.
solve for f to get f = 3000 * 1.06^3 = 3573.048.

since they didn't specify how many times the interest rate was compounded per year, i would go wih the simple add-on interest type loan formula.

f = future value
p = pressent value
r = interest rate per time period.
n = number of time periods.

in the formulas i'm using, f is the same as A and n is the same as t.

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