Answer:
Instructions are listed below
Explanation:
Giving the following information:
To purchase a new truck, you borrow $30,000.
The bank offers a 6-year loan at an interest rate of 3.25% compounded annually.
You make only one payment at the end of the loan period, repaying the principal and interest.
A) Numbers of years= 6
B) Interest rate= 3.25% annual
C) We know the present value= $30,000
D) We know that the passing of time generates interest. Because we will pay in the end, the interest is compounded annually.
E) To calculate the total debt, we need to use the following formula:
FV= PV*(1+i)^n
FV= final value
PV= present value
i= interest rate
n= number of years
FV= 30000*(1.0325)^6= $38346.42
F) Interest= final value - principal
Interest= 38346.42 - 30000= 8346.42