Question

URGANT!!!!

An amount of $17,000 is borrowed for 10 years at 4.75% interest, compounded annually. If the loan is paid in full at the end of that period, how much must be paid back?
Use the calculator provided and round your answer to the nearest dollar.

Answer 1

$27,039

Explanation:

Calculating the amount of interest :

• A = P (1 + r/n)^(nt)

1. A = interest
2. P = principal
3. r = rate of interest (in decimal)
4. n = number of times compounded
5. t = time (in years)

Given values :

• P = $17,000
• r = 4.75% = 0.0475
• n = 1
• t = 10

Solving :

• A = (17,000)(1 + 0.0475/1)¹⁰
• A = (17,000)(1.0475)¹⁰
• A = (17,000)(1.59052433)
• A = $27,039 (nearest dollar)