Question

Now, assume that Abigail’s friend volunteers to pay compound interest instead of simple interest for her loan. If interest is accrued at 8.2% compounded annually, all other things being equal, how much money will Abigail’s friend owe her in 13 years?

Answer 1

Answer:

$4178.752

Explanation:

In the given question some information is missing i.e " Principal ".The correct value is $1500

Given:

Principal(P) = $1,500

Interest rate (r) = 8.2% = 8.2 / 100 = 0.082

Number of years (n) = 13 years

Amount = ?

Calculation:

$Amount = P(1+i)^{n}\\Amount = 1,500(1+0.082)^{13}\\=1,500(1.082)^{13}\\=1,500(2.78582858)\\=4,178.752$

Therefore, total amount paid = $4178.752