A man has a medical situation and needs money, so he approaches a lender and asks him $15,000, paid in 5 years. Thelender says that the fixed annual interest rate will be 7%. How much does this credit cost the man?

A= the amount of money to pay for the credit after theperiod of time

P= the initial balance of the credit

R= the fixed interest rate (mainly fixed in years)

t= time (mainly in years)

Interestrates are usually handled by banks in years. However, with private lenders, time unitslike days, weeks, ormonths can be used.