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What is the interest payable on a loan of 5000000 borrowed at 10% p.a for 5 yrs. and 20...

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podar10 | Student, Grade 10 | eNoter

Posted July 6, 2012 at 1:27 PM via web

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What is the interest payable on a loan of 5000000 borrowed at 10% p.a for 5 yrs. and 20 yrs.

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justaguide | College Teacher | (Level 2) Distinguished Educator

Posted July 6, 2012 at 2:14 PM (Answer #1)

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For an amount of 5000000 borrowed at 10% p.a the interest payable in a time period t is equal to 5000000((1+0.1)^t - 1)

The interest payable for 5 years is equal to 5000000(1.1^5 - 1) = 3052550

The interest payable for 20 years is 5000000(1.1^20 - 1) = 28637499.75

The interest payable if 5000000 is borrowed at an interest rate of 10% for 5 years is 3052550 and for 20 years it is 28637499.75

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