Kevin borrowed $32,500 to purchase a new car. If the rate on the loan is 6% compounded annually, how much will he pay in total over the course of the 5 year loan?

Question

asked Oct 6, 2020 142k views

1 Answer

Sjay · Answer 1 · 2020-10-10T22:27:33+0000

Answer: He would pay $43492.33 in total over the course of the 5 years.

Explanation:

Since we have given that

Amount he borrowed = $32500

Rate of compounded annually = 6%

Number of years = 5 yr

As we know the formula for "Compound Interest':

$A=P(1+(r)/(100))^n\\\\A=32500(1+(6)/(100))^5\\\\A=32500((100+6)/(100))^5\\\\A=32500(1.06)^5\\\\A=\$43492.33$

Hence, He would pay $43492.33 in total over the course of the 5 years.