Carol can borrow $13 000 to buy a new car from the bank at 8% for five years,or from her friend Eric,who is willing to lend her the money at 7% for five years.If Carol accepts Eric's offer,he can expect a lump- sum repayment in five years of approximately

Question

Quizplus · Accepted Answer

The lump-sum repayment can be calculated using the formula for compound interest: A = P(1 + r)^n, where P is the principal amount ($13,000), r is the annual interest rate (7% or 0.07), and n is the number of years (5). Plugging in the values, A = 13000(1 + 0.07)^5 ≈ $18,233.

Carol Can Borrow $13 000 to Buy a New Car