Question

Norman borrowed $13,000 from his bank. The loan will be compounded quarterly for 4.5 years at a 7% interest rate. The full amount to the nearest whole cent)he will owe to the bank (principal + interest) is:Noto: Use the formula: FV = P(1 +y.$17,764.90.$17,149.06.$16,997 45.$18,056.34None of these choices are correct.

Answer 1

It is given that 13000 was borrowed from the bank at the rate of 7% compunded quarterly for 4.5 years.

The number of compounding periods is given by

$kn=4.5\times4=18$

The amount is given by:

$\begin{gathered} A=P(1+\frac{\frac{r}{k}}{100})^{kn} \\ A=13000(1+\frac{\frac{7}{4}}{100})^{18} \\ A=17764.90439\approx17764.90 \end{gathered}$

Hence the amount is $17764.90

Option A is correct.