Question

Hi i NEED HELP WITH THIS QUESTION ASAP

Calculate the compound interest paid if the amount is borrowed at 5% p.a for 26 years and compounded monthly
(HOW DO I DO THIS QUESTION) PLS HELP AND EXPLAIN HOW DO YOU DO THIS> IT WOULD BE A GREAT FOR ME.

Answer 1

A = $36,594.00

A = P + I

where

P (principal) = $10,000.00

I (interest) = $26,594.00

Calculation Steps:

First, convert R as a percent to r as a decimal

r = R/100

r = 5/100

r = 0.05 rate per year,

Then solve the equation for A

A = P(1 + r/n)nt

A = 10,000.00(1 + 0.05/12)(12)(26)

A = 10,000.00(1 + 0.0041666666666667)(312)

A = $36,594.00

Summary:

The total amount accrued, principal plus interest, with compound interest on a principal of $10,000.00 at a rate of 5% per year compounded 12 times per year over 26 years is $36,594.00.

Answer 2

Answer: $2240.59

Explanation:

To calculate the compound interest paid when an amount is borrowed at 5% p.a for 26 years and compounded monthly, you can use the formula:

A = P(1 + r/n)^(nt)

where:

A = the amount of money you will have after t years

P = the principal amount (the amount borrowed)

r = the annual interest rate (as a decimal)

n = the number of times the interest is compounded per year

t = the time (in years) for which the money is borrowed

In this case, we have:

P = the amount borrowed (not given in the question)

r = 5% p.a, or 0.05 as a decimal

n = 12 (since the interest is compounded monthly)

t = 26 years

We need to find the amount of compound interest paid, so we need to find the difference between the amount of money you will have after 26 years (A), and the amount you borrowed (P).

Let's assume the amount borrowed (P) is $1000. Then, we can substitute these values into the formula:

A = 1000(1 + 0.05/12)^(12*26)

A = 1000(1.004167)^312

A = 1000(3.240590)

A = $3240.59

So, after 26 years, the amount of money you will have is $3240.59. The compound interest paid is the difference between the amount borrowed and the final amount:

Compound interest paid = $3240.59 - $1000

Compound interest paid = $2240.59

Therefore, the compound interest paid if the amount is borrowed at 5% p.a for 26 years and compounded monthly is $2240.59.