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Alf needs to borrow $15,000 to pay for his college tuition. He can borrow the money from his
parents at a rate of 3.55% interest compounded annually for 4 years, or he can borrow from his
local bank at a rate of 3.50% interest compounded continuously for 4 years
Manipulation of Numerical Data

Sagot :

Alf would prefer to borrow from his parents because their rates are more favourable.

The future value of the loan if he borrows from his parents is given by this formula: A(1 + r)^n

Where:

A = amount  

R = interest rate  

N = number of years  

$15,000(1 + 0.0355)^4 = $17,246.13

The future value of the loan if he borrows from the local bank is given by this formula: : A x e^r x N

Where:

  • A= amount
  • e = 2.7182818
  • N = number of years
  • r = interest rate

$15,000 x  2.7182818^0.035 x 4 = $62,137.18

To learn more about future value, please check: https://brainly.com/question/14640433

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