Question

in order to start a small business, a student takes out a simple interest loan for $5000 for 6 months at a rate of 8.25%.
a. how much interest must the student pay?
b. find the future value of the loan.

a. the amount of interest is $ 206.25
(round to the nearest cent as needed.)
b. the future value of the loan is $\square
(round to the nearest cent as needed.)

Explanation:

Step1: Recall Future Value Formula

The formula for the future value \( A \) of a simple - interest loan is \( A=P + I \), where \( P \) is the principal amount and \( I \) is the interest.
We know that \( P=\$5000 \) and from part (a), \( I = \$206.25 \).

Step2: Calculate Future Value

Substitute the values of \( P \) and \( I \) into the formula:
\( A=5000 + 206.25 \)
\( A = 5206.25 \)

Answer:

\( 5206.25 \)