Question

Lynn Ally, owner of a local Subway shop, loaned $45,000 to Pete Hall to help him open a Subway franchise. Pete plans to repay Lynn at the end of 6 years with 12% interest compounded semiannually.

How much will Lynn receive at the end of 6 years? (Do not round intermediate calculations. Round your answer to the nearest cent.)

Answer 1

	WORKING NOTES:
		Par Value of loan	45000
		Rate of interest	12%
		Half yearly interest	6%
		Period = 6 years X 2 =	12 period of 6 months
	SOLUTION:
	CALCULATION OF VALUE OF LOAN AFTER 6 YEARS
	Period	Loan Amount	Interest @ 6%	Cumulative Value
	1	$45,000.00	$                       2,700.00	$                      47,700.00
	2		$                       2,862.00	$                      50,562.00
	3		$                       3,033.72	$                      53,595.72
	4		$                       3,215.74	$                      56,811.46
	5		$                       3,408.69	$                      60,220.15
	6		$                       3,613.21	$                      63,833.36
	7		$                       3,830.00	$                      67,663.36
	8		$                       4,059.80	$                      71,723.16
	9		$                       4,303.39	$                      76,026.55
	10		$                       4,561.59	$                      80,588.15
	11		$                       4,835.29	$                      85,423.44
	12		$                       5,125.41	$                      90,548.84
	ANSWER = Value of loan at the end of 6 years =		$                     90,548.84