Question

A person borrows $50000 loan from bank at a rate of 10% for 5 years compounded yearly.

a) Calculate the total amount paid after 5 years.
b) Find the interest paid.​

Answer 1

Given:

• P= $50,000
• R= 10%
• T= 5 years

Note that:

• P= Principal amount
• R= Rate of interest
• T= Time period

Solution:

`\large\boxed{Formula: A= P(1+ (R)/(100){)}^(T)}`

Let's substitute according to the formula.

`A= 50000(1+ (10)/(100){)}^(5)`

A= $80525.5

Now, we can find the interest paid

`\large\boxed{I= A-P}`

We'll have to deduct the total amount from the principal amount.

Let's substitute according to the formula.

`I= 80525.5-50000`

I= $30525.5

Hence, the total amount paid after 5 years is $80525.5 and $30525.5 was paid as interest.