Question

If you borrow 400$ for 5 years at an annual interest rate of 3% what is the total amount of money you will pay back?

Answer 1

463.71 (2dp)

Explanation:

If we have multiple % changes we can multiply all multipliers togethers to find the overall change.

find the percentage multiplier of 3% (since you are adding and not taking away 3%, the percentage multiplier must be over 1.)

percentage multiplier: 1.03

We are borrowing money for 5 years, therefore:

1.03 x 1.03 x 1.03 x 1.03 x 1.03 will get you the overall percentage change.

1.03^5 in short

so 400 * 1.03^5 will get you the total amount of money you will need to pay back.