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26 votes
A college student plans to take out a $6,000 loan to cover the cost of purchasing a used car. The loan has a 6% annual interest rate compounded continuously, with no payments due for the first two years. Determine the balance due at the end of the first two years.

$6,764.98
$5,183.28
$5,637.58
$7,166.65

User Pedronveloso
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2.4k points

2 Answers

21 votes
21 votes

Final answer:

The balance due at the end of the first two years for a $6,000 loan with a 6% annual interest rate compounded continuously is $6,764.98.

Step-by-step explanation:

To determine the balance due at the end of the first two years for a $6,000 loan with a 6% annual interest rate compounded continuously, we use the formula for continuous compounding:

A = Pert

Where:

t is the time the money is invested for, in years.

Substituting the given values:

A = 6000 * e(0.06*2)

A = 6000 * e0.12

A = 6000 * 1.127497

A = $6764.98

Therefore, the balance due at the end of the first two years is $6,764.98.

User Fabio Cenni
by
3.0k points
17 votes
17 votes

Answer:

$6,764.98

Step-by-step explanation:

i got it righttt

User Multidynamic
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3.1k points