SOLUTION: Kathleen has a $610 loan payment due in eight months. What amount of money should she be able to pay today if the interest on her loan is 3.75% per annum? Equivalent amount =?

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Question 1173636: Kathleen has a $610 loan payment due in eight months. What amount of money should she be able to pay today if the interest on her loan is 3.75% per annum?
Equivalent amount =?

Found 2 solutions by CPhill, ikleyn:
Answer by CPhill(1959)   (Show Source):
You can put this solution on YOUR website!
To find the equivalent amount Kathleen should pay today, we need to calculate the present value of her future loan payment. Here's how:
**Understanding the Concepts**
* **Future Value (FV):** $610 (the amount due in 8 months)
* **Annual Interest Rate (r):** 3.75% or 0.0375
* **Time (t):** 8 months, which is 8/12 of a year
* **Present Value (PV):** The amount to pay today
**Calculations**
Since this is simple interest, we can use the following formula:
* PV = FV / (1 + rt)
Let's plug in the values:
* PV = $610 / (1 + (0.0375 * (8/12)))
* PV = $610 / (1 + (0.0375 * 0.666667))
* PV = $610 / (1 + 0.025)
* PV = $610 / 1.025
* PV ≈ $595.12
**Answer**
Kathleen should be able to pay approximately $595.12 today.

Answer by ikleyn(52756)   (Show Source):
You can put this solution on YOUR website!
.
Kathleen has a $610 loan payment due in eight months. What amount of money
should she be able to pay today if the interest on her loan is 3.75% per annum?
Equivalent amount =?
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The problem is worded incorrectly, since it does not define the notion/conception " today " on the timeline.

To be correct, the problem, in traditional formulation, should ask

        What amount of money should she pay at the maturity day of the loan ?

As the problem is presented in the post, it makes it clear
to me (and to anyone) that its composer is unprofessional Math writer.