Jane Smith took out a loan for $40,000 to pay for her child's education. The loan would be repaid at the end of eight years in one payment with interest of 12%. What is the total amount Jane has to pay back at the end of the loan?

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gabrielcardoso gabrielcardoso · Answer 1 · 2020-03-17T02:46:41+01:00

Answer:

99 038.52 USD

Step-by-step explanation:

In order to solve this question we have to use the compound interest formula

A = P*(1+i)ˆn

A: final amount including principal

P: principal amount

i: interest per year

n: total number of years

A = 40000 (1+0.12)ˆ8

A = 99 038.52 USD

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abidemiokin abidemiokin · Answer 2 · 2022-05-23T12:18:51+02:00

The total amount Jane has to pay back at the end of the loan is $78400

Simple interest is the amount added on a sum of money.

The formula for calculating amount is expressed as:

Amount = Principal + Interest

A = P + PRT

Given the following

P = $40000

R = 12 % = 0.12

T = 8 years

Substitute

A = 40000 + 40000(0.12)(8)

A = 40000 + 38400
A = 78400

Hence the total amount Jane has to pay back at the end of the loan is $78400

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