Question

An amount of $47,000 is borrowed for 7 years at 5% Interest, compounded annually. If the loan is paid in full at the end of that period, how much must be paid back? ✓ ​

Answer 1

Answer: To calculate the total amount that must be paid back at the end of the 7-year period for the $47,000 loan with 5% interest compounded annually, we can use the formula for compound interest:

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

Where:

A = the total amount to be paid back at the end of the period

P = the principal amount (initial loan amount) = $47,000

r = the annual interest rate (as a decimal) = 5% = 0.05

n = the number of times the interest is compounded per year (annually in this case)

t = the number of years

Given:

P = $47,000

r = 0.05

n = 1 (interest compounded annually)

t = 7 years

Now, let's calculate the total amount (A):

A = $47,000 * (1 + 0.05/1)^(1*7)

A = $47,000 * (1.05)^7

Using a calculator or computing the values step by step:

A = $47,000 * 1.4025511155

A ≈ $65,883.72

So, the total amount that must be paid back at the end of the 7-year period is approximately $65,883.72.