Question

Taylor planes to borrow $4500 from the bank to purchased a used vehicle. If he borrows the money at a rate of 4% interest for 2 years, what is the total amount he will have to pay back to the bank?

Answer 1

Answer:

The Amount which will be pay back to bank in 2 years is $4867.2  

Step-by-step explanation:

Given as :

The principal borrow from account = $4500

The rate of interest applied = 4 %

The Time period of loan = 2 years

Let The amount pay back to the bank = A

From Compounded method

Amount = Principal × $(1+\frac{Rate}{100})^{Time}$

Or, Amount = $4500 × $(1+\frac{4}{100})^{2}$

Or, Amount = $4500 × ( 1.04 )²

So, Amount = $4500 × 1.0816

∴    Amount = $4867.2

Hence The Amount which will be pay back to bank in 2 years is $4867.2  Answer