Question 961371: Alice Horn, owner of Horn's Ceramics Shop, loaned $12,000 to Pete Hall to help him open a deli. Pete plans to repay Alice at the end of 5 years with 8% interest compounded semiannually. How much will Alice receive at the end of 5 years?
Found 2 solutions by mananth, ikleyn:
Answer by mananth(16946)   (Show Source):
You can put this solution on YOUR website! Given P= 12000
n=2
t=5
r= 8% = 0.08
n= 2 so r = 0.04
A= 17762.93
Alice will receive approximately $17,763 at the end of 5 years
Answer by ikleyn(52777)  (Show Source):
You can put this solution on YOUR website! .
Normally, a loan is re-paid using equal regular payment; so, this loan,
in traditional understanding, must be re-paid by equal portions every 6 months
(not at the end of the 5-th year).
If so, then the standard methodology for calculating the semi-annual payments
and hence, the total in 5 years, is totally different from calculated by @mananth.
The amount, calculated by @mananth is the future value of an ordinary annuity
(of an amount deposited for 5 years at 8% annual interest compounded semi-annually).
It has nothing in common with the loan (the common are the words,
that sounds identically, but have totally different meaning for loans).
So, my conclusion is that in this post, the notion of a loan, which is STANDARD in Finance,
is intently (or due to illiteracy of a composer) mixed up with the notion of a regular annuity
to confuse a reader.
Otherwise, the problem formulation, if written professionally, must be different
Alice Horn loaned $12,000 to Pete Hall to help him open a deli.
Pete plans to repay Alice in 5 years with 8% interest compounded
semiannually. How much will Alice receive, in total, back
for the loan at the end of 5 years?
As I observe during last several days, there is a flow of posts, written
inaccurately and/or unprofessionally with the goal to confuse the readers.
It is very sad to see them.
For such composers (who only  to be students) I have a powerful tool:
If I see such posts in the future, I will write to the managers of this project,
asking them, the managers, to remove such writers from their positions in the project.
With explanations and pointing all their defective posts.
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