Question

Michael wants tto start a garmets business. He borrowed 50000 for 5 years at 14% from his friend. The intrest is compoudee semi-annually from his friend. What is the total amount he will have to pay back to his friend?Round to the nearest cent

Answer 1

98,357.57

Explanation:

The formula to find the total amount obtained using compound interest is given as:

A = P(1 + r/n)^nt

Where:

A = Amount returned or payed back.

P = Amount borrowed = 50,000

R = Interest rate = 14% = 0.14

T = Time = 5 years

n = number of time compounded = semi annually = 2

Hence,

A = 50,000(1 + 0.14/2)^2 ×5

A = 50,000(1 +0.07)^10

A = 98,357.57

The amount he is paying back to his friend is 98,357.57.