Question

$325 is borrowed from a bank that charges 4% interest compounded annually. How much is owed after 1 year, 3

years, 7 years, and 20 years?

Answer 1

338

365.58

427.68

712.12

Explanation:

for annually compounding interest

PV(1+i)^n

for one year

325(1.04)

338

for 3 years

325(1.04)^3

365.58

For 7 years

325(1.04)^7

427.68

for 20 years

325(1.04)^20

712.12