enny borrowed $500 for five years at 4 percent interest, compounded annually. What is the total amount she will have paid when she pays off the loan?
total amount = P (1 + i)t
correct so it is equal to
500 * (1+0.04)^5
Now solve
Jenny borrowed $500 for five years at 4 percent interest, compounded annually. What is the total amount she will have paid when she pays off the loan?
total amount = P (1 + i)t
To calculate the total amount she will have paid when she pays off the loan, you can use the formula for compound interest:
Total amount = Principal (1 + interest rate)^time
In this case, the principal (P) is $500, the interest rate (i) is 4% (or 0.04 as a decimal), and the time (t) is 5 years.
Let's plug in these values into the formula:
Total amount = $500 * (1 + 0.04)^5
To calculate this, you can follow these steps:
1. Calculate 1 + 0.04 = 1.04
2. Raise 1.04 to the power of 5 (or multiply 1.04 by itself five times).
1.04 * 1.04 = 1.0816
1.0816 * 1.04 = 1.1259
1.1259 * 1.04 = 1.1699
1.1699 * 1.04 = 1.2167
1.2167 * 1.04 = 1.2653
3. Multiply the result by $500 to get the total amount:
1.2653 * $500 = $632.65
Therefore, the total amount she will have paid when she pays off the loan is $632.65.