Math Help For College

Question

a loan is borrowed for $1,800 for 2 years at a compound interest of 6% .interest is compounded annually. what is the compound amount.

Answer 1

the underlying compound interest formula that you want to use on this one is

A = P(1 + r)^t

for this scenario that means taking

A = 1800(1 + 0.06)^2

A = 1800(1.06)^2

A = 2022.48

meaning that the final compounded amount here is $2,022.48

Answer 2

Hi Casynthia.....  There is a formula for this....  Compound Interest formula. Where:

C= Compound Interest=?

 

P=Principal=$1800.00

 

r=rate=6% =0.06

 

n=number of periods =2

 

 

                                                        C=P⟨ (1+r)∧2   -1)⟩

       

 

                                                          

                                                       C= 1800∗⟨ (1+ 0.06)^2  -1)⟩    -------->^2  raised to the second power

 

                                                        C=1800*(1.06)^2     -1)  -------first raise to 2nd power (1.06)^2

 

                                                        C=1800*(1.12)     -1     (1.12 is 1.06 raised to second power)

 

                                                         C= 2016.00  -1 

 

                                                         C= 2016.00    -1 (Is 1800 * 1.12)  -1    =(2016 minus 1)

                                                         

                                                          C=$2015.00