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borrowed 8000 at a rate of 20%, compounded quarterly. Assuming she makes no payments, how much will she owe after 8 years?

1 Answer

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Answer: 115,200

Explanation:

If his money is compounded quarterly by 20%, therefore the added interest will be 20%of 8,000 which is 1,600/quarter of a year. This will be equivalent to (4×1600) compounded interest for 1year i.e 6,400

If he borrowed 8000 initially, the accrued amount after one year will be initial money borrowed + compound interest = 8000 + 6400

= 14,400

After 8years, she will would have own 8×14,400 which is equivalent to 115,200.

This shows that she must have own 115,200 after 8years

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