If a person borrows $3,000 at 8% annual interest and never makes any payments, how much will the loan balance be after 10 years?
A) $4,500
B) $5,400
C) $6,476.77
D) $7,676.67

Question

Quizplus · Accepted Answer

We can use the formula for compound interest:

A = P(1 + r/n)^(nt)

where A is the final amount, P is the principal (starting amount), r is the annual interest rate (as a decimal), n is the number of times the interest is compounded per year, and t is the time in years.

In this case, P = $3,000, r = 0.08, n = 1 (since the interest is compounded annually), and t = 10.

Plugging in the values, we get:

A = 3000(1 + 0.08/1)^(1*10) 
A = 3000(1.08)^10 
A = $6,476.77

Therefore, the loan balance will be $6,476.77 after 10 years. Answer choice C is the correct answer.

If a Person Borrows $3,000 at 8% Annual Interest and Never