Question

kevin borrowed $32,500 to purchase a new car. If the rate on the loan is 6% compounded annually, how much will he pay in total over the course of the 5 year loan?

Answer 1

Answer: He would pay $43492.33 in total over the course of the 5 years.

Step-by-step explanation:

Since we have given that

Amount he borrowed = $32500

Rate of compounded annually = 6%

Number of years = 5 yr

As we know the formula for "Compound Interest':

$A=P(1+\frac{r}{100})^n\\\\A=32500(1+\frac{6}{100})^5\\\\A=32500(\frac{100+6}{100})^5\\\\A=32500(1.06)^5\\\\A=\ 43492.33$

Hence, He would pay $43492.33 in total over the course of the 5 years.