Calculate the amount to be paid back on a $20,000 loan with an interest rate of 12% compounded yearly after five years.(1 point)
To calculate the amount to be paid back on a loan compounded yearly, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the loan
P = the principal amount (the loan amount)
r = the annual interest rate (in decimal form)
n = the number of times the interest is compounded per year (in this case, it's compounded yearly)
t = the number of years
In this case:
P = $20,000
r = 12% = 0.12
n = 1 (compounded yearly)
t = 5 years
Plugging in the values:
A = $20,000(1 + 0.12/1)^(1*5)
A = $20,000(1 + 0.12)^5
A = $20,000(1.12)^5
A = $20,000(1.7623)
A ≈ $35,246
Therefore, the amount to be paid back on a $20,000 loan with a 12% interest rate compounded yearly after five years is approximately $35,246.