Question

Suppose a bank loans $7,200 at an interest rate of 4% compounded annually. Find the total amount owed on the loan after 4 years.

A.
$7787.52

B.
$8422.98

C.
$27,659.52

D.
$29,952.00

Answer 1

@Juicstice

Answer 2

id just use the formula

Answer 3

\[A=P(1+r/n)^{nt}\]

Answer 4

since it compounds once a year, n=1 and the rest is pretty much self evident

Answer 5

P = 7200
r = .04
t =4

Answer 6

Here's an example of how to use the formula that aministre said...

A=P(1+r/n)^nt [Use the compound interest formula]
A=The amount of money in the savings account
P=The principle
r=The interest rate converted to a decimal
t=The time that the money is in the account
n=The number of times the money is compounded per year
.
Write each answer to the following questions in a complete sentence.
a. If the principle amount is $800 at 2.4% interest compounded monthly for 5 years the total amount will be $901.89.
A = 800 [ 1 + ((.024)/(12)) ]^((12)(5))

A =901.89
.
b. If a person wishes to have $1500 in 4 years and it is compounded quarterly at an interest rate of 3.5%, she must invest $1304.83.
A=P(1+(r/n))^(nt) [Solve for P]
P=(1/[1+(r/n))^(nt)] [Plug-in the values]
P = (1500) / {[ 1 + ((.035)/(4)) ]^((4)(4))}
P=1304.8316
.

Answer 7

*amistre

Answer 8

can someone telll me how I do the formula...Im not getting this!

Answer 9

@amistre64

Answer 10

\(\bf A=P\left(1+\frac{r}{n}\right)^{nt}
\\ \quad \\
p=\textit{ original amount}\to 7,200\\
n=\textit{compounding cycle per year, annually means once a year}\to 1\\
r=rate\to 4\%\to \frac{4}{100}\to 0.04\\
t=years\to 4
\\ \quad \\
A=7,200\left(1+\frac{0.04}{1}\right)^{1\cdot 4}\)