Question

Sylvie borrows $550 for a new smartphone. Her 2-year loan has 1.4% annual interest compounded monthly.What is the total cost of Sylvie's loan after she makes all the payments?

Answer 1

Answer:a 553.92

Explanation:

Answer 2

The rule of the compounded interest is

`A=P(1+(r)/(n))^(nt)`

A is the new amount

P is the initial amount

r is the rate in decimal

n is the number of the periods per year

t is the time in years

Since the initial amount is $550, then

P = 550

Since the rate is 1.4%, then

r = 1.4/100 = 0.014

Since it is compounded monthly, then

n = 12

Since it is for 2 years, then

t = 2

Substitute them in the rule above to find A

`\begin{gathered} A=550(1+(0.014)/(12))^(12*2) \\ A=565.6083953 \end{gathered}`

The total cost of Sylvie's loan is $565.61 to the nearest cent