Which choices are equivalent to the expression below?
1 answer:
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Answer:
- Interests charged for 4 years: $80
- Total amount to pay back:$480
Step-by-step explanation:
- To know the future value of an specific amount that is borrowed from a bank we use the following equation:
, where FV is future value, PV present value, n the amount of periods and i the interest rate.
- In this particular case, the present value of the loan is $400, n=4 (4 years), i=5%. Then the future value equals:
. Then FV= $480, which is the total amount of money she would have to return in 4 years.
- The interest paid can be calculated as the total amount paid ($480) minus the inicial loan ($400), which means that total interests paid= FV- PV= $80.