Question

Calculate the compound interest a saleswoman would have to pay if she borrows

$54 000 for 9 years at 12% per annum compound interest.​

Answer 1

Given:

Principal = $54,000

Time = 9 years

Rate of compound interest = 12% per annum.​

To find:

The compound interest.

Solution:

The formula for amount is:

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

Where, P is principal, r is the rate of interest in decimal, n is the number of time interest compounded and t is the number of years.

The interest is compounded annually, so
`n=1`.

Substituting
`P=54000,\ t=9,\ n=1,\ r=0.12` in the above formula, we get

`A=54000\left(1+(0.12)/(1)\right)^(1(9))`

`A=54000\left(1.12\right)^(9)`

`A=149746.252902`

`A\approx 149746.25`

The amount after 9 years is $149746.25.

Now, the compound interest is:

`C.I.=A-P`

Where, C.I. is compound interest, A is amount and P is principal.

`C.I.=149746.25-54000`

`C.I.=95746.25`

Therefore, the compound interest is $95746.25.