Question

You have taken out a loan of $11,000 for 4 years with an interest rate of 3% compounded annually. The loan will be repaid by end of year payments. Fill in all the boxes below, and round all entries to the nearest cent. Enter only positive values for ALL ANSWERS.

Answer 1

To calculate the total amount of interest on a loan with compound interest, we can use the formula A = P(1 + r/n)^(nt) - P. For the given loan of $11,000 with an interest rate of 3% compounded annually for 4 years, the total amount of interest is approximately $1,924.37.

Step-by-step explanation:

To calculate the total amount of interest on a loan with compound interest, we can use the formula:

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

Where:

• A is the total amount including interest
• P is the principal (the initial loan amount)
• r is the interest rate (in decimal form)
• n is the number of times the interest is compounded per year
• t is the number of years

For the given loan of $11,000 with an interest rate of 3% compounded annually for 4 years, we can plug in the values:

• P = $11,000
• r = 0.03
• n = 1 (compounded annually)
• t = 4 years

Substitute these values into the formula and solve to find A:

1. A = 11000(1 + 0.03/1)^(1*4) - 11000
2. A = 11000(1.03)^4 - 11000
3. A ≈ $12,924.37

Therefore, the total amount of interest from the loan is approximately $1,924.37.