The answers for following questions are;
i. $244.64
ii. $ 5314.64
What is future value?
Future value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value is important to investors and financial planners, as they use it to estimate how much an investment made today will be worth in the future.
Here, future value or amount;
A = P(1 + r)ⁿ
Where,
A = future value = ?
P = principal = $ 12,300
r = interest rate = 6%/12 = 0.06/12 = 0.005
n = number of periods = 12 X 6 years = 72
A = P(1 + r)ⁿ
= 12,300(1 + 0.06/12)⁷²
= 12300 (1 + 0.005)⁷²
= 12300 (1.005)⁷²
= 12300 (1.4384)
= 17,614.64
Each monthly payment = Total payment / number of months
= $17,614.64 / 72
= $ 244.64
Total amount of interest = Total payment - Principal payment
= 17,614.64 - 12300
= $ 5314.64
Thus, The answers for following questions are;
i. $244.64
ii. $ 5314.64
Learn more about Interest from:
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