Final answer:
To determine the annual payment to pay off a $21 trillion debt over 15 years at a 3% interest rate, we use the loan payment formula. By plugging in values for principal, interest rate, and number of payments, we get the annual payment amount required to settle the debt.
Step-by-step explanation:
To calculate the annual payments needed to pay off a public debt of $21 trillion over 15 years with an annual interest rate of 3%, we can use the loan payment formula, which is
A = P × rac{r(1 + r)^n}{(1 + r)^n - 1}
Where:
- A is the annual payment we want to find,
- P is the principal amount ($21 trillion),
- r is the annual interest rate (3% or 0.03),
- n is the total number of payments (15 years).
By plugging in the values into the formula, we'll get:
A = 21,000,000,000,000 × rac{0.03(1 + 0.03)^{15}}{(1 + 0.03)^{15} - 1}
First, we need to calculate the numerator and denominator separately and then divide them. This will give us the value of the annual payment that would be required to completely pay off a $21 trillion debt over 15 years at an annual interest rate of 3%.
This kind of calculation is often used in finance to figure out loan repayments, deal with large debts, and understand the impact of interest rates on long-term borrowing.