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4 February, 16:51

N amount of $15,000 is borrowed for 10 years at 8.75% interest, compounded annually. if the loan is paid in full at the end of that period, how much must be paid back?

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  1. 4 February, 17:17
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    We should determine amount of interest per year.

    Multiply the percentage to the former loan.

    interest per year = 8.75% * 15,000

    interest per year = 0.0875 * 15,000

    interest per year = 1,312.5

    Amount of interest each year is $1,312.5

    Estimate interest for 10 years

    interest 10 years = interest per year * 10

    interest 10 years = 1,312.5 * 10

    interest 10 years = 13,125

    Amount of interest for 10 years is $13,125

    Calculate how much he pay

    total = the loan + the interest

    total = 15,000 + 13,125

    total = 28,125

    The total he must pay is $28,125
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