Question

Alisha has a five–year car loan of $15,000 with an interest rate of 6 percent. If the interest is compounded annually, how much will she pay in total for her car? $19,500.25 $15,900.50 $20,073.38

Answer 1

$20,073.38

Explanation:

Step 1: Find the percentage. The formula for annual compound interest is A = P(1 + r)^t, where A = amount (total amount), P = principal (initial amount), r = rate (percentage), and t = time (in years). Our rate is 6%, which is 0.06 in decimal form. Add it to 1. 1 + 0.06 is 1.06.

Step 2: Raise 1.06 to the 5th power. Because we are finding the amount in 5 years, we do that step. 1.06^5 is 1.3382255776.

Step 3: Do not delete the decimal from the calculator. Multiply it by 15,000 to find the total amount. When you do, you get 20,073.383664 or 20,073.38 when rounded to the nearest hundredth.

Answer 2

Option C. $20,073.38

Explanation:

Alisha has a five-year car loan of $15,000 with an interest rate of 6%.

To calculate how much amount she will pay in total for her car, we use the formula of compound interest.

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

A = amount after 5 years

P = Principal amount ( 15,000 )

r = Rate of interest 6% ( 0.06)

t = time in years (5)

n = number of compounding in a year (1)

Now we plug these numbers in the formula

`A=15,000(1+(0.06)/(1))^((1)(5))`

= 15,000 ( 1.06)
`^(5)`

= 15,000 × 1.338226

= $20,073.38

Alisha will pay $20,073.38 in total for her car.