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Homework Help: Please help me answer question

  1. Nov 21, 2007 #1
    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 £) ?
     
  2. jcsd
  3. Nov 21, 2007 #2
    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!
     
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