Suppose that Betty takes out a loan for $300 at an annually compounded interest rate of 6 percent to be repaid after five years.How much will be required to pay off the loan at the end of the five years?

Question

Quizplus · Accepted Answer

The future value of the loan can be calculated using the formula for compound interest: FV = P(1 + r)^n, where P is the principal amount ($300), r is the annual interest rate (0.06), and n is the number of years (5). Plugging in the values, FV = 300(1 + 0.06)^5 = 300(1.338225) = $401.47.

Suppose That Betty Takes Out a Loan for $300 at an Annually