Question

Ryan borrowed $8000 at a rate of 6%, compounded annually. Assuming he makes no payments, how much will he owe after 9 years?Do not round any intermediate computations, and round your answer to the nearest cent.

Answer 1

For this question we use the formula for the compounded interest:

$M=M_0(1+r)^t$

Where M_0 is the initial amount, r is the interest and t is the number of times interest is applied. Substituting M_0=$8000, r=0.06, and t=9 we get:

$M=8000(1+0.06)^9\approx8000\cdot1.689478959\approx13515.83$