Answer:
$5659.11
Step-by-step explanation:
We are given;
- Time of loan maturity is 5 years
- Rate of compound interest is 7% compounded quarterly
- Principal amount of the car is $4000
We are required to determine the total amount he paid at the end of 5 years..
The concept being tested is compound interest;
We are going to use the compound interest formula;
Amount = P(1+r/100)^n
Where P is the the principal amount
r is the rate of interest
n is the interest periods
In this case;
n = (5 × 4) = 20
r = 7 ÷ 4 = 1.75 ( as the money was compounded quarterly)
Thus;
Amount =$ 4000 ( 1 + 1.75)^20
= $4000 (1.0175)^20
= $5659.11
Therefore, the money that Joe will have paid at the end of 5 years is $5659.11
