Question

An amount of $47,000 is borrowed for 7 years at 4.75% interest, compounded annually. If the loanis paid in full at the end of that period, how much must bepaid back?

Answer 1

Recall the compound ineterse formula:

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

From the question it follows:

`P=47,000,t=7,r=4.75\%,n=1`

Substituting values gives:

`A=47000(1+(4.75\%)/(1))^(1\cdot7)`

Solving for A gives:

`A=65039`

Therefore the amount to be paid back is $65039