This morning, you borrowed $12,700 at an APR of 6.9 percent. If you repay the loan in one lump sum three years from today, how much will you have to repay?

Question

Quizplus · Accepted Answer

To calculate the total amount to be repaid on a loan with compound interest, you can use the formula A = P(1 + r/n)^(nt), where A is the amount to be repaid, P is the principal amount ($12,700), r is the annual interest rate (6.9% or 0.069), n is the number of times the interest is compounded per year, and t is the time the money is borrowed for in years. Since the compounding frequency isn't specified, we'll assume it's compounded annually (n = 1) for simplicity. Plugging the values into the formula gives A = $12,700 * (1 + 0.069/1)^(1*3) = $12,700 * (1.069)^3 ≈ $15,514.47.

This Morning, You Borrowed $12,700 at an APR of 6