Question

Jenny borrowed $8000 at a rate of 9%, compounded semiannually. Assuming she makes no payments, how much will she owe after 10Do not round any intermediate computations, and round your answer to the nearest cent.

Answer 1

We will use the formula

`\begin{gathered} A=P(1+(r)/(n))^(nt) \\ where\text{ } \\ A=amount\text{ after 10 years = ?} \\ P=money\text{ borrowed = \$8,000} \\ r=9\%=(9)/(100)=0.09 \\ t=time\text{ in years = 10} \\ n=compounding=semi-annualy=2 \end{gathered}`

plugging in, we have

`\begin{gathered} A=8,000(1+(0.09)/(2))^(2*10) \\ A=8,000(1.045)^(20) \\ A=8,000*2.4117140 \\ A=19,293.7121986 \end{gathered}`

Hence the answer is $19,293.71