Question

Ahmet borrows $700 and is charged compound interest at 15% per year. How much will he have to pay back in total after 6 years?

Give your answer to two decimal places.

Answer 1

The required amount Ahmet needs to pay after 6 years is $1619.14.

What is compound interest?

Compound interest is the interest on deposits computed on both the initial principal and the interest earned over time.

Amount = principal[1 + r/n]ⁿᵃ

Principal = P rate= r Time =a , n = compounding frequency

Here,

From the given data,

P = 700, r = 15% and t = 6 (n =1)

Now,

Amount = principal[1 + r/n]ⁿᵃ

Amount = 700(1 + 0.15)⁶

Amount = $1619.14

Thus, the required amount Ahmet needs to pay after 6 years is $1619.14.

Explanation: