Question

Sean borrowed some money at 7.5% per year, compounded annually. After three years, he paid $2244.92 to pay off thr loan. What sum of money did sean borrow?

Answer 1

Sean borrowed approximately $1937.29.

Step-by-step explanation:

To find the sum of money Sean borrowed, we can use the formula for compound interest:

Final Amount = Principal Amount × (1 + Interest Rate)^Time

Plugging in the given values:

$2244.92 = Principal Amount × (1 + 0.075)^3

Simplifying, we get:

Principal Amount = $2244.92 / (1.075)^3

Calculating, the Principal Amount is approximately $1937.29. Therefore, Sean borrowed approximately $1937.29.

Answer 2

The amount that Sean borrowed at 7.5% per year, compounded annually, for which he paid $2,244.92 after three years is $1,807.07.

We can use the present value Formula:

`PV=FV (1)/((1+r)^(n))`

PV = present value

FV = future value

r = rate of return

`{n}` = number of periods

We can determine the present value using an online finance calculator as follows:

N (# of periods) = 3 years

I/Y (Interest per year) = 7.5%

PMT (Periodic Payment) = $0

FV (Future Value) = $2,244.92

Results:

PV (present value) = $1,807.07

Total Interest= $437.85