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)
Responses
$1,030,726
$1,030,726
$51,470
$51,470
$640,000
$640,000
$35,246.83
To calculate the amount to be paid back on a $20,000 loan with an interest rate of 12% compounded yearly after five years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the loan (amount to be paid back)
P = the principal amount ($20,000)
r = annual interest rate (12% = 0.12)
n = number of times interest is compounded per year (1 since it is compounded yearly)
t = number of years (5)
Plugging in these values, we get:
A = 20,000(1 + 0.12/1)^(1*5)
A = 20,000(1.12)^5
A = 20,000(1.76234)
A = $35,246.80
Therefore, the amount to be paid back on a $20,000 loan with an interest rate of 12% compounded yearly after five years is approximately $35,246.80. The closest option given is $35,246.83.