Question

An amount of 25,000 is borrow for 15 years at 5.5% interest, compounded annually. If the loan is paid in full at the end of that period, how much must be paid back?

Answer 1

Answer:
`55,811.91`

Explanation:

Given

Principal amount is 25,000

Time Period is
`t=15\ yr`

Rate of interest
`r=5.5\%`

Amount in compound interest is given by

`\Rightarrow A=P\left(1+r\%\right)^t`

Insert the values

`\Rightarrow A=25,000(1+(5.5)/(100))^(15)\\\\\Rightarrow A=25,000(1.055)^(15)\\\Rightarrow A=55,811.91`

Therefore,
`55,811.91` must be paid back