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William borrowed from a bank. The interest rate was p.a. The interest was compounded monthly. He repaid after each settlement at the end of the month. After repayments, how much did he owe the bank?A. B. C. D.
Full solution
Q. William borrowed from a bank. The interest rate was p.a. The interest was compounded monthly. He repaid after each settlement at the end of the month. After repayments, how much did he owe the bank?A. B. C. D.
- Calculate Monthly Interest Rate: Calculate the monthly interest rate.The annual interest rate is , so the monthly interest rate is divided by months.Monthly interest rate = Convert the percentage to a decimal for calculations.Monthly interest rate =
- Calculate Amount After First Month: Calculate the amount owed after the first month before repayment.The interest is compounded monthly, so we apply the monthly interest rate to the principal.Amount after first month = Principal amount Amount after first month = Amount after first month = Amount after first month =
- Calculate Amount After First Repayment: Calculate the amount owed after the first repayment.William repays at the end of the first month.Amount after first repayment = Amount after first month - Repayment amountAmount after first repayment = - Amount after first repayment =
- Calculate Amount After Second Month: Calculate the amount owed after the second month before repayment.Again, apply the monthly interest rate to the new principal.Amount after second month = Amount after first repayment Amount after second month = Amount after second month = Amount after second month =
- Calculate Amount After Second Repayment: Calculate the amount owed after the second repayment.William repays at the end of the second month.Amount after second repayment = Amount after second month - Repayment amountAmount after second repayment = - Amount after second repayment =
