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Mary owes June $750, and wants to pay her off. She decides to borrow the amount from her bank at a discount rate of 16%. If she borrows the money for 10 months, find the amount of the loan she should ask for so that her proceeds are $750?

Respuesta :

Answer:

$662.77

Step-by-step explanation:

Data provided in the question:

Amount Mary owes = $750

Discount rate, r = 16%

Time period = 10 months = [tex]\frac{10}{12}[/tex] years =  0.833 years

Now,

Amount Mary owes = Loan Amount × ( 1 + r )ⁿ

or

750 = Loan amount × [tex](1+0.16)^{0.833}[/tex]

or

750 = Loan Amount × 1.131

or

Loan Amount = $662.77

The amount of the loan she should ask for so that her proceeds are $750 is $662.77

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