Question

An amount of 40.000 is borrowed for 6 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? Use the calculator provided and round your answer to the nearest dollar.

Answer 1

A = $56,740

Explanation:

Use the Compound Amount formula A = P(1 + r)^t. Substitute 0.05 for r and $40,000 for P:

A = $40,000(1 + 0.05)^6

A = $56,740.26, or, rounded off to the nearest dollar,

A = $56,740