Answer:
<em>Keisha will owe $18444.32 after 9 years</em>
Step-by-step explanation:
<u>Compound Interest</u>
It occurs when the interest is added to the principal rather than paying it in.
It basically means paying interest over interest.
The formula is:
Where:
A = final amount
P = initial principal balance
r = interest rate
n = number of times interest applied per time period
t = number of time periods elapsed
Keisha borrowed P = $8000 at a rate of r = 9.5% = 0.095 (assumed annual rate) compounded semiannually (twice a year).
If she makes no payments, the amount she owes increases over time. After t = 9 years, we can calculate the amount owed by using the above formula.
Please, note that since there are 2 compounding periods per year, n = 2, thus:
Operating:
A = $18444.32
Keisha will owe $18444.32 after 9 years