Calculating Zobia's Loan Debt with Interest in 2006

[kingksa]

On 31 December 2005, Zobia owed 1000 £ on a loan. Interest is added to the debt at the rate of 1.1% at the end of each month.

1-If Zobia makes no repayments during the following year, how much will she owe on
31 December 2006 ( to the nearest £)?

2-Zobia sets up a direct debit to pay the loan company 60 £ at the end of each month in 2006. How much will she owe on 31 December 2006 ( to the nearest £) ?

 

[danni7070]

1)
12 months in one year.
so t = 12

1000*1.1^(t) = total amount that she would have paid (but didn't).

set 12 for t and the answer must be to the nearest pound.

If this is unclear you can always check what happens in the next months. If you do 1.1*1000 you get 1100. Now Zobia owes 1100 so in two months she will owe 1100*1.1 = 1210

So if she doesn't pay for two months the interest is 1210 - 1000 = 210!