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Question

Fred’s credit union offers a simple interest home equity loan that uses a daily rate. For such loans, interest is computed using the following formula: (Loan balance) (daily rate)(days between payments) If Fred borrows $15,000 at a daily periodic rate of 0.000144 and he pays the loan off in one single payment of$18,153.60, how long was the term of the loan?

Solution

VerifiedStep 1

1 of 3The amount A owed at the end of t years is the sum of the principal P borrowed and the interest I charged. That is,

$A=P+I = P+Prt = P(1+rt)$

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