What is the compound interest on a
$40,000 loan @ 16% for 3 years?
40000*1.16^3
;wpiuy3 tgyf eleeeeeeeeeeeeee
To calculate the compound interest on a loan, we need to know the principal amount (the initial loan amount), the interest rate, and the time period for which the interest is calculated. In this case, the principal amount is $40,000, the interest rate is 16%, and the time period is 3 years.
The formula for compound interest is:
A = P(1 + r/n)^(nt)
Where:
A = the final amount including interest
P = the principal amount (initial loan amount)
r = the annual interest rate (expressed as a decimal)
n = the number of times that interest is compounded per year
t = the time period in years
In this case, interest is compounded annually, so n = 1.
Let's plug in the values:
P = $40,000
r = 16% (0.16 as a decimal)
n = 1 (compounded annually)
t = 3 years
A = 40,000(1 + 0.16/1)^(1*3)
A = 40,000(1 + 0.16)^3
A = 40,000(1.16)^3
A = 40,000(1.505376)
A = $60,215.04
To calculate the compound interest, we subtract the principal amount from the final amount:
Compound Interest = A - P
Compound Interest = $60,215.04 - $40,000
Compound Interest = $20,215.04
Therefore, the compound interest on a $40,000 loan at 16% for 3 years is $20,215.04.