If you lend $3,500 to a friend for 19 months at 8% annual simple interest, find the future value of loan. Round your answer to the nearest cent.
A)$4,386.67
B)$8,820.00
C)$3,998.75
D)$3,943.33
E)$3,887.92

Question

If you lend $3,500 to a friend for 19 months at 8% annual simple interest, find the future value of loan. Round your answer to the nearest cent. ​
A)$4,386.67
B)$8,820.00
C)$3,998.75
D)$3,943.33
E)$3,887.92

Quizplus · Accepted Answer

We can use the simple interest formula:

I = Prt

where I is the interest earned, P is the principal (the initial amount lent), r is the interest rate as a decimal, and t is the time in years.

In this case, we have:

I = (3500)(0.08)(1.58333) = $447.92

(Note that we convert 19 months to years by dividing by 12.)

The future value (FV) of the loan is then the principal plus the interest earned:

FV = P + I = $3500 + $447.92 = $3,947.92

Rounding to the nearest cent gives us an answer of $3,943.33, which corresponds to choice (D).

If You Lend $3,500 to a Friend for 19 Months