Question

An amount of $44,000 is borrowed for 9 years at 3% interest, compounded annually. If the loan is paid in full at the end of that period, how much must be paid

back?

Answer 1

A= $52,190.93

Explanation:

A = $ 52,190.93

A = P + I where

P (principal) = $ 40,000.00

I (interest) = $ 12,190.93

Calculation Steps:

First, convert R percent to r a decimal

r = R/100

r = 3%/100

r = 0.03 per year,

Then, solve our equation for A

A = P(1 + r/n)nt

A = 40,000.00(1 + 0.03/1)(1)(9)

A = $ 52,190.93

Summary:

The total amount accrued, principal plus interest,

from compound interest on an original principal of

$ 40,000.00 at a rate of 3% per year

compounded 1 times per year

over 9 years is $ 52,190.93.