Question

mr. Smith took out a 54200 car loan at 10.2% compounded annually what would the interest be after 4 years

Answer 1

The compounded loan means that in the first year the 10.2% of interest is add to the initial 54200 and that value generate the next year the 10.2%

then in the first year the interest will be:

You use a rule of three:

`\text{1st}=(54200\cdot10.2)/(100)=5528.4`

As the first year the interest is 5528.4

To the second year that sum is added to the 54200 to get the interest:

`54200+5528.4=59728.4`
`2nd=(59728.4\cdot10.2)/(100)=6092.3`

Third year:

`59728.4+6092.3=60820.7`
`3rd=(60820.7\cdot10.2)/(100)=6203.7`

Fourth year:

`60820.7+6203.7=67024.4`
`4th=(67024.4\cdot10.2)/(100)=6836.5`

After 4 years:

`67024.4+6836.5=73860.9`
`=(73860.9\cdot10.2)/(100)=7533.8`After 4 years the interest will be: 7533.8