Elementary Technical Mathematics

Published by Brooks Cole
ISBN 10: 1285199197
ISBN 13: 978-1-28519-919-1

Chapter 1 - Section 1.16 - Application Involving Percent: Business and Personal Finance - Exercises - Page 95: 4


Amount owed at the end of six years is $\$14,753.92$.

Work Step by Step

Find the total amount due using the formula $A=P\left(1+\dfrac{r}{n}\right)^{nt}$ where $P$=principal loan amount, $r=$annual interest rate, $t$=time in years, and $n$=number of compounding periods in a year The given problem has: $P=\$10,500$ $t=6$ $r=5.75\%$ $n=2$ (since compounded semi-annually) Use the formula above to obtain: $A=\$10,500\left(1+\dfrac{5.75\%}{2}\right)^{2(6)} \\A=\$10,500\left(1+\dfrac{0.0575}{2}\right)^{2(6)} \\A=\$14,753.92182 \\A\approx \$14,753.92$
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