Question

Sarah takes out a loan today for $26,000 at an interest rate of 2 percent a year. She plans to repay the loan after 5 years. How much will he have to pay?

Sarah will have to pay:__________

Answer 1

$28,706.10

Explanation:

The computation of the amount of pay is shown below:

Here we have to find the future value by using the following formula

Future value = Present value × (1 + interest rate)^number of years

= $26,000 × (1 + 0.02)^5

= $28,706.10

We simply applied the above formula so that the amount of pay could be come and the same is to be considered