Problema Solution
An amount of $21,000 is borrowed for 12 years at 6.25% interest, compounded annually. If the loan is paid in full at the end of that period, how much must be paid back?
Answer provided by our tutors
P = $21,000 the principle
i = 6.25% or 0.0625
t = 12 years
A = the future value (the sum that must be paid back)
A = P(1 + i)^t
A = 21000(1 + 0.0625)^12
A = $43,467.69
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$43,467.69 must be paid back.