Ryan has an eight-year loan for $6,000. He is being charged an interest rate of 5 percent, compounded annually. Calculate the total amount that he will pay.
amount = 6000(1.05)^8
= ....
Ryan has an eight-year loan for $6,000. He is being charged an interest rate of 5 percent, compounded annually. Calculate the total amount that he will pay.
ion even know...
diks
if you dont know then why tf do you answer... tf
To calculate the total amount that Ryan will pay for an eight-year loan, we need to add the principal amount (the original loan of $6,000) to the total interest accrued over those eight years.
Step 1: Calculate the interest accrued each year.
Since the interest is compounded annually, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = final amount
P = principal amount
r = annual interest rate (as a decimal)
n = number of times the interest is compounded per year
t = number of years
In this case:
P = $6,000
r = 5% or 0.05 (as a decimal)
n = 1 (compounded annually)
t = 8 years
Step 2: Calculate the final amount.
To find the final amount, we need to substitute the values into the compound interest formula:
A = 6000(1 + 0.05/1)^(1*8)
A = 6000(1 + 0.05)^8
A = 6000(1.05)^8
A ≈ 6000 * 1.46933
A ≈ $8,816
Therefore, the total amount Ryan will pay is approximately $8,816.