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An amount of $16,000 is borrowed for 8 years at 7.25% interest, compounded annually. If the loan is paid in full at the end of that period, how much must be paid back?

Respuesta :

Answer:

$28009.05

Step-by-step explanation:

Let us use the formula A = P(1 + r/n)^(nt)

Step 1: Convert 7.25 to decimal

[tex]7.25\% = 0.0725[/tex] in decimal form

  • Step 1: Percent means 'per 100'. So, 7.25% means 7.25 per 100 or simply 7.25 over 100.
  • [tex]7.25 \div 100\\\\= \frac{7.25}{100}\\\\= 0.0725[/tex]
  • If you divide 7.25 by 100, you'll get 0.0725 (a decimal number).

Step 2: Solve with the formula

[tex]A = 16000(1 + 0.0725)^8\\\\A= 28009.05[/tex]

  • Step 1: Add the numbers: [tex]1+0.0725=1.0725[/tex]
  • [tex]=16000\cdot \:1.0725^8[/tex]
  • [tex]=16000\cdot \:1.75056[/tex]
  • Step2: Multiply
  • [tex]=28009.05068[/tex]

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