Question

An amount of $32,000 is borrowed for 10 years at 5.75% 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.
5
?

Answer 1

Total cost of the loan $55,969.8.-

Explanation:

Giving the following information:

An amount of $32,000 is borrowed for 10 years at 5.75% Interest, compounded annually.

To calculate the total cost of the loan, we need to use the Future Value (FV) formula:

FV= PV*(1 + i)^n

PV= loan

i= interest rate

n= number of periods

FV= 32,000*(1.0575^10)

FV= $55,969.8