Answer:
$7200
Step-by-step explanation:
The interest rate on $5,000 accumulated by Edgar is 20%.
He does not make any payment for 2 years and the interests are compounded continuously.
The amount of money he owes after 2 years is the original $5000 and the interest that would have accumulated after 2 years.
The formula for compound amount is:
[tex]A = P(1 + R)^T[/tex]
where P = amount borrowed = $5000
R = interest rate = 20%
T = amount of time = 2 years
Therefore, the amount he will owe on his debt is:
[tex]A = 5000 (1 + 20/100)^2\\\\A = 5000(1 + 0.2)^2\\\\A = 5000(1.2)^2\\[/tex]
A = $7200
After 2 years, he will owe $7200
