Merrie borrowed $500 from her parents, agreeing to pay them back when she graduated from college in four years. If she paid interest compounded daily at 16%, how much would she owe at the end of the four years?

Question

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The correct answer is A.The amount of interest owed is $500 * (1 + 0.16/365)^365 * 4 - $500 = $448.02. The total amount owed is $500 + $448.02 = $948.02.

Merrie Borrowed $500 from Her Parents, Agreeing to Pay Them