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Johnny borrows $30,000 from Tony at 2%...

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by BTGmoderatorLU » Fri Oct 27, 2017 6:29 am
Johnny borrows $30,000 from Tony at 2% daily interest compounded daily. How much does Johnny owe Tony after 8 weeks?

a) 30000*0.02^56
b) 30000*1.12
c) 30000*2.12
d) 30000*1.02^56
e) (30000*1.02)^56

The OA is D.

Please, can any expert assist me with above problem? I don't have it clear. Thanks.
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by [email protected] » Fri Oct 27, 2017 9:59 am
Hi LUANDATO,

This question is a variation on a typical Compound Interest question. Thus, we'll need the Compound Interest Formula:

Total = (Principal)(1 + R)^T where R is the interest Rate and T is the number of 'time periods'

In this question, the variables are:
Principal = $30,000
R = .02/day
T = 8 weeks = 8(7) = 56 days

Thus, the equation becomes:
(30,000)(1.02)^56

Final Answer: D

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by Scott@TargetTestPrep » Tue Nov 19, 2019 6:16 pm
BTGmoderatorLU wrote:Johnny borrows $30,000 from Tony at 2% daily interest compounded daily. How much does Johnny owe Tony after 8 weeks?

a) 30000*0.02^56
b) 30000*1.12
c) 30000*2.12
d) 30000*1.02^56
e) (30000*1.02)^56

The OA is D.

Please, can any expert assist me with above problem? I don't have it clear. Thanks.
After 8 weeks Johnny owes:

30,000(1 + 0.02)^(8 x 7) = 30,000(1.02)^56

Answer: D

Scott Woodbury-Stewart
Founder and CEO
[email protected]

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