Question

If Aizuddin borrowed RM 6.300 from a bank which offers an interest of 8%

compounded annually, find.
(a) the future value
(b) the amount of interest charged​

Answer 1

(a) The formula to calculate the amount of money (A) that Aizuddin must pay the bank after n years, with the original amount of borrowed money is 6300 RM, interest of 8%, compounded annually, is described as following:

A = principal x (1 + rate)^(time in year)

A = 6300 x (1 + 8/100)^n

(b) The amount of interest charged (AC) that Aizuddin must pay after n years:

AC = A - 6300

AC = 6300 x (1 + 8/100)^n - 6300

AC = 6300 x [(1 + 8/100)^n - 1]

Hope this helps!