Question

Bruce borrowed $1,000 for his trip. If Bruce waits for five years to begin paying back his loan, how much will he owe? $1,251.10

$1,310.21
$1,610.51
$1,810.71

Answer 1

C. $1610.51

Explanation:

Answer 2

`\$1,610.51`

Explanation:

The complete question is

Bruce takes out a personal loan of $1,000 to go on a trip to Florida. His loan has an annual compound interest rate of 10%. The loan compounds once each year. When you calculate Bruce's debt, be sure to use the formula for annual compound interest.

Bruce borrowed $1,000 for his trip.

If Bruce waits for five years to begin paying back his loan, how much will he owe?

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final amount owed

P is the amount of money borrowed

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=5\ years\\ P=\$1,000\\ r=10\%=10/100=0.10\\n=1`

substitute in the formula above

`A=1,000(1+(0.10)/(1))^(1*5)`

`A=1,000(1.10)^(5)`

`A=\$1,610.51`