Question

an amount of $43,000 is borrowed for five years at 8% interest compounded annually. if the loan is paid in full at the end of the period how much must be paid back

Answer 1

$63,181.11

Explanation:

You want the amount due on a $43,000 loan for 5 years with 8% interest compounded annually.

Value

The value of the loan increases by a factor of 1+8% = 1.08 each year. After 5 years, the amount due is ...

$43,000(1.08^5) ≈ $63181.11

At the end of the 5-year period, $63,181.11 must be repaid.

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