The key to these questions is to understand the compounding. In this case, they are telling you the banks compound annually.
So the time period in the compounding equation is YEARS.
The compounding equation is:
(Future Loan Amount) = (Current Loan Amount) * (1 + the interest rate of the time period in decimals) ^ (number of time periods)
(Use this for all future questions too - if compounding monthly then time period is total number of months and interest rate is annual rate divided by 12 etc)
So in this case the answer is:
(Future Loan Amount) = (Current Loan Amount) * (1 + the interest rate of the time period in decimals) ^ (number of time periods)
(Future Loan Amount) = $7,500 * (1 + 0.038) ^ (11) = $11,304
(note - when answering its hard to see the original question. I believe the answer asked for 11 years. If not, if 1 year, etc just plug in that number into the equation - so one year is simply: 7500*1.038 = $7,785
