Final answer:
To find the amount Erica owes at the end of 2 years, use the formula for compound interest: A = P(1 + r/n)^(nt). Plug in the values for the loan amount, interest rate, and time to calculate the future value of the loan and we get A = $7465.60.
Step-by-step explanation:
To find the amount Erica owes at the end of 2 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the loan
P = the initial principal (loan amount)
r = the annual interest rate (as a decimal)
n = the number of times interest is compounded per year
t = the number of years
Plug in the values for the loan amount, interest rate, and time
A = $6400(1 + 0.08/1)^(1*2)
A = $6400(1.08)^2
A = $6400(1.1664)
A = $7465.60
So, Erica owes $7465.60 at the end of 2 years.