Question

Jim borrowed $8000 at a rate of 13%, compounded semiannually. Assuming he makes no payments, how much will he owe after 6 years? Round your answer to the nearest cent.

Answer 1

Given: P = 8000 , rate = 13% and time 6 years and compounded semia annually

To find: Total amount need to be paid after 6 years

Solution:

Since, the amount is comounded semi annually

so, formula for the same can be written as

$A=P(1+\frac{\frac{r}{2}}{100})^{2t}$

Now, putting the values in the above formula and solving for amount

$\begin{gathered} A=8000(1+\frac{\frac{13}{2}}{100})^{2\times6} \\ A=8000(1+\frac{6.5}{100})^{12} \\ A=8000(\frac{106.5}{100})^{12} \\ A=8000(1.065)^{12} \\ A=8000\times2.13 \\ A=17040 \end{gathered}$

Hence, he owe to pay amount of $17040 at the end of 6 years