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Suppose Melissa borrows $3500 at an interest rate of 14% compounded each year,

Assume that no payments are made on the loan.
Do not do any rounding.

(a) Find the amount owed at the end of 1 year

(b) Find the amount owed at the end of 2 years.

PLEASE HELPPP!!!

User Joaerl
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1 Answer

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Hello! AP Calc student here. Compound interest is simply a matter of knowing the equation and how you use it to achieve what the problem is asking of you.

Compound interest is expressed as this equation: A = P(1 + r/n)^n•t

I remember having a problem remembering each variable, but essentially, A is the final amount, P is the original amount owed, r is the interest rate, n is the amount of times compounded, and t is the time elapsed.

A = amount owed(what you are finding in the problem)
P = 3500
r = 14% (expressed as .14)
n = t (compounded each year)
t = time in years

So, for both a and b, you just plug in the relevant variables in the context of the problem and solve for A!

a) A = 3500(1 + .14/1)^(1•1)

b) A = 3500(1 + .14/2)^(2•2)
User Bill Mote
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