Question

Beth will borrow $10,000 which earns 4% compound interest and she will repay that amount in 20 years. How much interest was earned on her loan?
Question 4 options:

$8,000


$21,911.23


$11,911.23


$18,000

Answer 1

Answer:

$I=\ 11,911.23$

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the amount that she will repay  

P is the amount borrowed  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=20\ years\\ P=\ 10,000\\ r=0.04\\n=1$  

substitute in the formula above  

$A=10,000(1+\frac{0.04}{1})^{1*20}$  

$A=10,000(1.04)^{20}$  

$A=\ 21,911.23$  

Find out the interest

$I=A-P$

substitute the values

$I=\ 21,911.23-\ 10,000=\ 11,911.23$