Geniuses. MATH-EINSTEIN help me out pls?

Question

This question has been plaguing me all day. I wouldn't hesitate to reward you with 10p if you help me out. Any help ,Please!


1. We borrow $2000 for a year, with a simple annual interest rate of 6%. After 5 months, we make a partial payment of $700. How much do we have to pay back at the end of the two
years?

2. We borrow $2000 for a year, with a simple annual interest rate of 6%. After 5 months, we
make a partial payment of $700. After an additional 9 months (that is, 14 months after the
start), we make anotherpartial payment of $800. How much do we have to pay back at the
end of the two years?

3. We borrowed $5000 for three years, with a compound annual interest rate of 8%. How much do we need to pay back at the end of the three years?

Pls Show workings.

Answer 1

There isn't enough information here.
In problems 1 & 2, I would want to know a) why you are borrowing for 1 year but not repaying until after 2 years, b) what are the terms of the loan with regard to early payment. There are many possibilities.
In problem 3, I would want to know the details of compounding. It could be daily, weekly, monthly, etc.

Answer 2

I assume you are borrowing $2000 and you are paying 6%interest per year for tow years. I assume you are paying interest only each month of 0.5% $2000 = $10.00/month. Nothing goes on the principal. So at the end of 5 monthsyou have paid $50 in interest. You then make a payment of $700, thus reducing the principal to $1300.00. Now for the next 19 months, you pay interest of $6.50/month for a total of $123.50. At that time you must fork over the remainder of your loan which is still $1300.00.
So at the end of the 2-year period, you will have paid 123.50+50
= $173.50 in interest and two payments of $700.00 and $1300.
This seems to be an unlikely scenario.

The second question could be answered using the same reasoning as in the 1st question.

The third question doesn't make sense to me. If you have borrowed $5000.00 at 8% compounded monthly, then an amortization schedule will have been set up indicating the amount you must pay each month. At the end of three years, you will owe nothing unless you were remiss on your monthly payments.

Answer 3

sevenlett is correct!

There isn't enough information here.
a) why you are borrowing for 1 year but not repaying until after 2 years, b) what are the terms of the loan with regard to early payment.

Answer 4

Maybe this website can help you with simple and compound interest...
http://www.getobjects.com/Components/Finance/TVM/iy.html

Sorry I couldnt give you a straightforward answer.