Question

What is the total amount that Matthew's bank will receive after lending him $8,000 for four years at an interest rate of 6 percent, compounded annually?

Answer 1

Answer: Total amount that Matthew's bank will receive $6312.40

Explanation:

Since we have given that

Principal amount =$8000

Rate of interest = 6%

Time = 4 years

As we know the formula for " Compound Interest ":

`A=P(1+(r)/(100))^n`

where

A denotes Amount

P denote Principle

n denotes time

r denotes rate of interest

So, our equation becomes,

`A=5000(1+(6)/(100))^4\\\\A=5000* (1.06)^4\\\\A=5000* 1.262\\\\A=\$6312.40`

Hence, total amount that Matthew's bank will receive $6312.40.