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
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?
$600
that is not the answer the answers are
A.
$608.33
B.
$729.99
C.
$765.77
hope
To find the total amount Jenny will have paid when she pays off the loan, we can use the formula for compound interest:
total amount = P (1 + i)t
Here's how to calculate it step by step:
1. Identify the variables:
- P: principal amount (loan amount) = $500
- i: annual interest rate (in decimal form) = 4% = 0.04
- t: number of years = 5
2. Substitute the values into the formula:
total amount = $500 (1 + 0.04)^5
3. Simplify the expression inside the parentheses:
total amount = $500 (1.04)^5
4. Calculate the exponential term:
total amount = $500 * 1.21665
5. Multiply the principal amount by the final value:
total amount = $608.33 (rounded to two decimal places)
Therefore, when Jenny pays off the loan after five years at 4% annual interest, she will have paid a total of approximately $608.33.