Answer: To solve this problem, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A is the final amount
P is the initial principal (the amount borrowed)
r is the annual interest rate (as a decimal)
n is the number of times the interest is compounded per year
t is the time period in years
In this case, we have:
P = $21,000
r = 8.75% = 0.0875
n = 1 (interest is compounded annually)
t = 13 years
So, plugging these values into the formula, we get:
A = 21,000(1 + 0.0875/1)^(1*13)
A = 21,000(1.0875)^13
A = $58,150.51
Therefore, if the loan is paid in full at the end of the 13-year period, $58,150.51 must be paid back, which includes the original principal plus the interest accrued over the 13-year period.
Explanation: