Question

12. Karen borrowed a sum of money for some big screen TVs and a

waterfall for her restaurant. If she borrowed $10,200 and received a 3.85
% interest rate compounded continuously, how much did Karen pay in
interest over a 7 year period? Round your answer to the nearest whole
number.

Answer 1

$3,155

Explanation:

First, convert R as a percent to r as a decimal

r = R/100

r = 3.85/100

r = 0.0385 rate per year,

Then solve the equation for A

The formula is given as:

A = Pe^rt

Where

P = Principal = $10,200

r = interest rate = 0.0385

t = Time in years = 7

A = Amount paid after t years

A = 10,200.00 × e^(0.0385×7)

A = $13,354.96

A = P + I where

P (principal) = $10,200.00

I = $13,354.96 - $10,200

I (interest) = $3,154.96

Therefore, the amount of money Karen paid after 7 years in interest to the nearest whole number is $3,155