Question

An amount of $45,000 is borrowed for 9 years at 6.25% interest, compounded annually. Of the loan is paid in full at the end of that period, how much must be paid back?Round your answer to the nearest dollar.

Answer 1

SOLUTION:

Step 1:

In this question, we are given the following:

An amount of $45,000 is borrowed for 9 years at 6.25% interest, compounded annually. If the loan is paid in full at the end of that period, how much must be paid back? Round your answer to the nearest dollar.

Step 2:

From step 1, the formulae for compound interest is given as :

$\text{Amount = Principal ( 1 +}\frac{R}{100})^t$

where,

Principal = $ 45, 000

Rate = 6.25%

Time = 9 years

Step 3:

Using the formulae, we can see that:

CONCLUSION:

The amount that must be paid back ( to the nearest dollar) = $ 77, 656