Question

Frank borrows 12000 dollars at 7.4 percent annual interest, compounded once per year, when he begins college. Four years later, how much will he owe? (Assume that he makes no payments during the four years.)

Answer 1

Answer: $15966.08

Explanation:

The formula to calculate the compound amount is given by :-

`A=P(1+r)^t`

, where P = initial deposit amount.

Time = Time period .

r= Rate of interest in decimal (compounded once per year)

Given : P= $ 12000

r= 7.4 percent =0.074

t= 4 years

Then, the compound amount after 4 years :

`A=12000(1+0.074)^(4)\\\\=12000(1.074)^4=12000(1.33050688258)\\\\=15966.082591\approx15966.08`

Hence, compound amount after 4 years = $15966.08