Question

Albert's 8 year loan of 12,200 is at 5.3% compounded annually. How much will he have paid in total for his loan?

Answer 1

Answer:

$18,441.10

Explanation:

We'll use the below formula to solve the given problem;

$FV=PV(1+\frac{r}{n})^{nt}$

where FV = future value

PV = present value = 12,200

r = annual interest rate in decimal = 5.3/100 = 0.053

t = number of time periods in years = 8

n = number of compounding periods = 1

Let's go ahead and substitute the above values into our formula and solve for FV;

$FV=12200(1+\frac{0.053}{1})^{1\times8}$$\begin{gathered} FV=12200(1.053)^8 \\ FV=\text{\ }18,441.10 \end{gathered}$

Therefore, the amount that will be paid back will be $18,441.10