Question

your $54,200 2- year car loan is at 15.1% compounded annually. what will you have paid for your car after 2 years

Answer 1

Express the formula for compound interest.

$A=P(1+\frac{r}{n})^{nt}$

Given that, P is 54200, r is 0.151, n is 1( Since, compounded annulaly) and t is 2.

Therefore, the total amount paid after two years is,

$\begin{gathered} A=54200(1+\frac{0.151}{1})^2 \\ =71804.2 \end{gathered}$

Therefore, the total amount paid after two years is 71804.2 dollar.