Jill Ley took out a loan to pay for her child's education for $60,000. The loan would be repaid at the end of 8 years in one payment with an interest of 6 percent. The total amount Jill has to pay back at the end of the loan is: (Points : 1)
To find the total amount Jill has to pay back at the end of the loan, we need to calculate the interest on the loan and add it to the original loan amount.
The formula to calculate compound interest is: A = P(1 + r/n)^(n*t), where:
A is the final amount
P is the principal amount (the original loan)
r is the annual interest rate (in decimal form)
n is the number of times interest is compounded per year
t is the number of years
In this case, Jill's principal amount (P) is $60,000, the interest rate (r) is 6% or 0.06 as a decimal, the loan is repaid once at the end of 8 years, so the number of times compounded (n) is 1, and the time (t) is 8.
We can substitute these values into the formula to find the final amount (A):
A = $60,000(1 + 0.06/1)^(1*8)
A = $60,000(1.06)^8
A ≈ $96,171.96
Therefore, the total amount Jill has to pay back at the end of the loan is approximately $96,171.96.
Add the interest to the principal.
I = PRT
I = 60,000 * 0.08 * 8