Question

Tammy borrowed $5000 at a rate of 12% compounded monthly. Assuming she makes no payments, how much will she owe after 9 years?

Answer 1

$14,644.63

Explanation:

To solve this problem we can use the compound interest formula which is shown below:

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

P = initial balance

r = interest rate

n = number of times compounded annually

t = time

First change 12% into a decimal:

12% ->
`(12)/(100)` -> 0.12

Lets plug in the values:

`A=5,000(1+(0.12)/(12))^(9(12))`

`A=14,644.63`

Tammy will own $14,644.63 after 8 years,