Question

Kyle took out a seven-year loan of $8,000 loan from his bank. The bank charges an interest rate of 5 percent, compounded yearly. Kyle wants to know the total amount he will have to pay back.

Answer 1

A = 8,000 (1 + 0.05)7

Explanation:

Edmentum

Answer 2

Assuming the loan is as described, seven-year loan, which means that Kyle does not repay a cent before seven years.

This is a compound interest problem where n=7 years, interest rate i=0.05, and present value P=8000.

At the end of seven years, Kyle will have to pay

Future value = F = P(1+i)^n = 8000(1.05)^7 = 11256.80 (to the nearest cent)