Question

suppose that $2000 is loaned at a rate of 13.5% compounded annually. assuming that no payments are made, find the amount owned after 3 years

Answer 1

$2924.27

Explanation:

This is an example of compound interest.

To work this out you would first have to convert the percentage into a decimal. You can do this by dividing the percentage of 13.5% by 100, this gives you 0.135. This is because percentages are out of 100.

The next step is add 0.135 and 1, this gives you 1.135. This is because you are working out the percentage increase.

Now to work out the new amount you would multiply the amount of $2000 by 1.135 to the power of 3, this gives you $2924.27. This is because you are working out 13.5% and adding it on to the new amount and then finding 13.5% of that new amount.

1) Divide 13.5 by 100.

`13.5/100=0.135`

2) Add 0.135 and 1.

`0.135+1=1.135`

3) Multiply $2000 by 1.135 by the power of 3.

`2000*1.135^3=2924.27`