Doubts

Exercise 3 - In-class Topic 8

Re: Exercise 3 - In-class Topic 8

by Julio Crego -
Number of replies: 0

Dear Alois, 

We start with a debt of 250

At the end of the year, we owe the same debt plus interest (250 + 0.08*250 = 1.08*250)

At the beginning of the second year, we owe 1.08*250

At the end of the second year, we need to pay interest on that debt: hence, the total debt payment is 250*1.08^2

If 250 is the principal, the remaining amount has to be interest.