since the 4.7% is an annual rate, for 6 months, use half the rate...
$3500 * (1 +0.047/2) =$3,582.25 due in 6 months
Re: compound interest
3500 * ( 1 + 0.042/12)^6 = $3,574.15
Difference in interest: $8.10
It just means that instead of monthly payments, the entire $3,500 plus accumulated interest is paid at the end of the six months.
Janet borrowed $3,500 to purchase a new laptop for school. Her bank offered her a simple interest loan at a rate of 4.7% with a single repayment in 6 months. Another bank offered him a loan that was compounded monthly at an annual interest rate of 4.2% with a single repayment in 6 months. Which option would cost her the least amount of interest and by how much?
I am totally stumped with the single repayment in 6 months... can anyone help me out?
