Question

An amount of $46,000 is borrowed for 9 years at 4% interest, compounded annually. if the loan is paid in full at the end of that period, how much must be paid back?

Answer 1

$65,472.34 The formula for compound interest is: A = P(1+r/n)^(nt) where A = Future amount P = Principle r = annual interest rate n = number of periods per year t = number of years So let's substitute the known values and calculate: A = P(1+r/n)^(nt) A = 46000(1+0.04/1)^(1*9) A = 46000(1+0.04)^9 A = 46000(1.04)^9 A = 46000(1.423311812) A = 65472.34 So $65,472.34 needs to be paid back after 9 years.