Answer
See below
Work Step by Step
(a)
Compute the Future value by substituting the values in the formula as mentioned below:
\[\begin{align}
& A=\$20,000\times{{\left(1+\frac{0.065}{12}\right)}^{12\times40}}\\&=\$20,000\times{{\left(1+0.00542\right)}^{480}}\\&=\$20,000\times{{\left(1.00542\right)}^{480}}\\&=\$267,818\end{align}\]
Hence, the future value of the loan is\[\$267,818\].
(b)
Computation of the interest amount can be done by deducting the Principal amount (P) from the future value (A) of the loan. Compute the interest amount as mentioned below:
\[\begin{align}
& \text{Interest amount}=A-P \\
& =\$267,392-\$20,000\\&=\$247,392\end{align}\]
Hence, the interest amount is\[\$247,392\].
