Frieda borrows R7500 from the bank at an interest rate of 26% per year, compounded weekly. The amount that Frieda will have to pay back after 78 weeks will equal

Question

Answer either:

1. R10425

2. R10607.60

3. R11031.32

4. R11066.60

5. R11430.24

Answer 1

26% a year is 26/52%=0.5% per week. The rate compounded over 78 weeks is therefore (1+0.5%)^78=(1.005)^78=1.4755 approx. applying this to R7500=R11066.6 (answer 4).