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Jay decides to take out a $12,000 student loan during his first year in college. If he is charged 4.5% interest that is compounded annually, how much will the total loan amount equal in four years when he graduates?

Respuesta :

Answer:

2,160.00

Step-by-step explanation:

okay so first we have to find 4.5% of 12,000

which is 540, then multiply 540 by the four years and

540 x 4 = 2,160.00

Lanuel

The total loan amount would be equal to $14,310 in four years when Jay graduates.

Given the following data:

  • Principal = $12,000
  • Interest rate = 4.5%
  • Time = 4 years

To determine how much (future value) the total loan amount would equal in four years when he graduates:

Mathematically, compound interest is given by the formula:

[tex]A = P(1 + r)^{t}[/tex]

Where;

  • A is the future value.
  • P is the principal or amount borrowed.
  • r is annual interest rate.
  • t is the number of years for the compound interest.

Substituting the given parameters into the formula, we have;

[tex]A = 12000(1 + 0.045)^{4}\\\\A=12000(1.045)^{4}\\\\A=12000(1.1925)[/tex]

Future value, A = $14,310

Read more: https://brainly.com/question/16992474

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