A designbuildoperate engineering company borrowed 6 million

A design-build-operate engineering company borrowed $6 million for 3 years so that it can purchase new equipment. The interest is compounded and the total amount owed will be paid in a single lump sum amount at the end of the 3-year period. The interest at the end of the first year will be $900,000. What is the interest rate on the loan How much interest w ill be charged at the end of the second year.

Solution

a) Interest rate = 9,00,000/6,00,00,000*100 = 15%

b) Interest in second year = 60900000*15% = 9135000