Assume you borrow $5,000 today and pay back the loan in one lump sum four years from today. You are charged 8 percent interest per year. What amount will you pay back and how much interest will you pay?
A) $6,399.56, $1,399.56
B) $6,508.21, $1,508.21
C) $6,802.44, $1,802.44
D) $7,902.11, $2,902.11

Question

Quizplus · Accepted Answer

The future value of the loan is calculated using the formula FV = PV * (1 + r)^n, where PV is the present value ($5,000), r is the interest rate (0.08), and n is the number of years (4). This results in $6,802.44, with $1,802.44 being the interest paid.

Assume You Borrow $5,000 Today and Pay Back the Loan