Question

A borrower has a loan of $ 50,000.00 at 6 % compounded annually with 9 annual payments. Suppose the borrower paid off the loan after 5 years. Calculate the amount needed to pay off the loan.

Answer 1

Answer:

We say that $16911.28 is compound interest of 50,000 for 5 year  from  now ,at 6% compound annually. The total amount needed to pay off the loan $66,911.28

Step-by-step explanation:

Given that,

$P=50,000$

$r=6$%

$t=5$ years

$A=?$

According to formula  $A=P\left ( 1+\frac{r}{100} \right )^{t}$

$A=50,000\left ( 1+\frac{6}{100} \right )^{5}$

$A=50,000\left ( 1+0.06 \right )^{5}$

$A=50,000\left ( 1.06 \right )^{5}$

$A=66911.28$

$CI = A-P$  ( CI = compound interest)

$CI=66,911.28-50,000.00$

$CI=16,911.28$

Total amount needed to pay off loan= $\left ( 50,000.00+16,911.28 \right )$ =  $66,911.28

Compound interest  $16911.28