If the loan is paid in full at the end of that period, then amount to be paid back is $ 52085.13
Solution:
Given, An amount of $21,000 is borrowed for 10 years at 4% interest, compounded annually.
The loan is paid in full at the end of that period, how much must be paid back
Now, let us find compound interest first.
[tex]\text { Compound interest }=\text { amount } \times\left(1+\frac{r}{100}\right)^{t}[/tex]
Here amount = 21000
r = rate of interest = 4%
t = time period = 10 years
By plugging in values we get,
[tex]\begin{array}{l}{\text { Compound interest }=21000 \times\left(1+\frac{4}{100}\right)^{10}} \\\\ {=21000 \times(1+0.04)^{10}} \\\\ {=21000 \times 1.04^{10}} \\\\ {=21000 \times 1.480=31085.1299}\end{array}[/tex]
So, compound interest on $21000 is $31085.13 approximately.
Now, amount to be paid back = loan amount + compound interest
Amount to be paid back = 21000 + 31085.13 = 52085.13
Hence, amount to be paid back is $ 52085.13
