Question

An amount of $48,000 is borrowed for 9 years at 3.5% interest, compounded annually, if the loan is paid in full at the end of that period, how much is paid back ,to the nearest dollar,?

Answer 1

Answer:

$65,419

Explanation:

We use the compound interest formula.

$\begin{gathered} \text{Amount, A(t)}=A_o(1+r)^t \\ \text{Initial Amount, }A_o=\ 48,000 \\ \text{Rate, r}=3.5\%=0.035 \\ \text{Time, t}=9\text{ years.} \end{gathered}$

Therefore, the amount to be paid back will be:

$\begin{gathered} A(t)=48000(1+0.035)^9 \\ =48000(1.035)^9 \\ =\ 65419.07 \end{gathered}$

The amount to be paid back will be $65,419 to the nearest dollar.