This was originally posted on another student's thread.
Suppose that $2000 is loaned at a rate of 19% ,compounded semiannually.
Assuming that no payments are made, find the amount owed after 5 years . Do not round any intermediate computations, and round your answer to the nearest cent.
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posted by Natasha
today at 12:43pm
just use your formula.
2000(1 + .19/2)^(2*5)
To find the amount owed after 5 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
- A is the final amount owed,
- P is the principal amount (initial loan amount),
- r is the annual interest rate (as a decimal),
- n is the number of times interest is compounded per year, and
- t is the number of years.
In this case,
P = $2000,
r = 19% = 0.19 (as a decimal),
n = 2 (since interest is compounded semiannually),
t = 5 years.
Plugging these values into the formula:
A = 2000(1 + 0.19/2)^(2*5)
Now let's calculate the amount owed.