The loan's future value A, or the total amount due at time t is $1105.
Given, P = $1000, r = 3.5%, t = 3 months.
We need to find the loan's future value A.
Simple interest is computed on the principal amount of a loan or the first deposit in a savings account. Simple interest does not compound, therefore an account holder will only get interest on the principal, and a borrower will never have to pay interest on previously collected interest.
We know that, [tex]Simple Interest=\frac{P\times\ T \times\ R }{100}[/tex]
Now, [tex]Simple Interest=\frac{1000\times3\times3.5}{100\times12}[/tex]
[tex]=\frac{10,500}{100} =105[/tex]
As we know, [tex]Amount=Principal+Simple Interest[/tex]
[tex]=1000+105=1105[/tex]
Hence, the loan's future value A, or the total amount due at time t is $1105.
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