Using compound interest, it is found that you would have paid a total of
$18,441 for your loan.
What is compound interest?
The amount of money earned, in compound interest, after t years, is given by:
[tex]A(t) = P\left(1 + \frac{r}{n}\right)^{nt}[/tex]
In which:
- A(t) is the amount of money after t years.
- P is the principal(the initial sum of money).
- r is the interest rate(as a decimal value).
- n is the number of times that interest is compounded per year.
In this problem, the parameters are given as follows:
P = 12200, r = 0.053, n = 1, t = 8.
Hence, the amount paid is given by:
[tex]A(t) = P\left(1 + \frac{r}{n}\right)^{nt}[/tex]
[tex]A(8) = 12200\left(1.053)^{8}[/tex]
A(8) = 18,441.
More can be learned about compound interest at https://brainly.com/question/25781328
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