Financial math question- equation of value? please help! asap

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kinghell2022

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A loan of $ 3000 due after 15 months the borrower wants to settle the loan now how much he pay when the interest rate =4 %

which one i will should use RULES
MV=P(1+rt)
FV=PV(1+r)^t


im Confused
 
Last edited:
kinghell2022 said:
A loan of $ 3000 due after 15 months the borrower wants to settle the loan now how much he pay when the interest rate =4 %

which one i will should use RULES
MV=P(1+rt)
FV=PV(1+r)^t


im Confused
Click to expand...

When is 'now'?
 
kinghell2022 said:
A loan of $ 3000 due after 15 months the borrower wants to settle the loan now how much he pay when the interest rate =4 %

which one i will should use RULES
MV=P(1+rt)
FV=PV(1+r)^t


im Confused
Click to expand...

There are several things which are unclear. The 'now' part you have already cleared up but there are several other points:
(1)The interest rate, although generally assumed as a yearly rate, could, in this case be take as for the entire 15 months.
(2)Is the interest a simple interest, as suggested by one poster, or is it compound interest, as suggested by another.
(3)If it is compound interest, what is the period; that is, is it compounded monthly, quarterly, yearly, ...?
 
i have the answer of the example but i understand it

the answer is the face value=3000
T=15/12
R=0.04
Old debt now 3000-3000*4*15/12 =2850
my

major question why in the answer used the maturity value rule instead of present value rule
 
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