Question

An amount of $19,000 is borrowed for 6 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? Use the calculator provided and round your answer to the nearest dollar.

Answer 1

The multiplier for increasing by 7.25% is 1.0725. To get our answer we times the price by the multiplier to the power of the amount of years:

19,000 x 1.0725⁶   ( it's to the power of 6 because of the six years)
= 28,915.94
= $28,916 (to the nearest dollar)

So if the loan is to be paid in full the $28,916 (to the nearest dollar) must be paid back.