Question

Find the amount Erica owes at the end of 3 years if $6100 is loaned to her at a rate of 4% compounded monthly.

a) $6,999.47
b) $7,215.58
c) $7,312.49
d) $7,480.15

Answer 1

To find the amount Erica owes at the end of 3 years, use the formula for compound interest. The correct answer is b) $7,215.58.

Step-by-step explanation:

To find the amount Erica owes at the end of 3 years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years.

In this case, P = $6100, r = 4%, n = 12 (compounded monthly), and t = 3. Plugging in these values, we get:

A = 6100(1 + 0.04/12)^(12*3)

A ≈ $7,215.58

Therefore, the amount Erica owes at the end of 3 years is approximately $7,215.58. The correct answer is b) $7,215.58.