Question

Amount of $28,000 is borrowed for nine years at 3.25 interest, compounded annually. If the loan is paid in full at the end of that period, how much must be paid back?Round your answer to the nearest dollar$=

Answer 1

Given:

Principal amount = $28,000

Time period = 9 years

Interest rate = 3.25

Required:

Find the total amount at the end of the period.

Explanation:

The amount formula when the interest is compounded annually is given by the formula:

$A=P(1+r)^{nt}$

Where P =principal amount

r = rate of interest

T = time period

n = Number of time

Substitute the given values in the amount formula.

$\begin{gathered} A=28,000(1+0.0325)^9 \\ A=28,000(1.33355) \\ A=37,339.51 \\ A=37,340 \end{gathered}$

Final Answer:

Thus the amount after 9 years is $37,340.