Question

Jill Ley took out a loan for $60,000 to pay for her child's education. The loan would be repaid at the end of eight years in one payment with interest of 6%. The total amount Jill has to pay back at the end of the loan is:

a. $28,800
b. $80,800
c. $88,800
d. $88,008
e. None of these

Answer 1

The total amount Jill has to pay back at the end of the loan is $95,630.88.

Step-by-step explanation:

To find the total amount Jill has to pay back at the end of the loan, we need to calculate the interest on the loan.

The loan amount is $60,000 and the interest rate is 6%. Using the formula for calculating compound interest, the total amount to be paid back can be found using the formula:

Total Amount = Principal * (1 + Interest Rate)^Time

Substituting in the values, we have:

Total Amount = $60,000 * (1 + 0.06)^8

Total Amount = $60,000 * (1.06)^8

Total Amount = $60,000 * 1.593848

Total Amount = $95,630.88

Therefore, the total amount Jill has to pay back at the end of the loan is $95,630.88.