Frank borrows 11000 dollars at 8.4 percent annual interest, compunded once per year, when he begins college. Four years later, how much will he owe? (Awwume that he makes no payments during the four years.)
2007-09-29 17:16:33 · 5 answers · asked by RedSparkle 1 in Business & Finance ➔ Investing
here is the formula to calculate it: 11000*(1+8.4%)^4.
2007-09-29 17:19:35 · answer #1 · answered by hahagoodguy 2 · 0⤊ 0⤋
Use the future value formula:
Future Value = Present Value X (1+ i) ^ Number Of Compounding Periods
Where:
^ means "to the power of"
i = The interest rate of 8.4%
4 = The Number Of Compounding Periods
$11,000 = The Present Value
Worked out:
FV = 11,000 X (1+.084) ^ 4
FV = 11,000 X 1.38
FV = 15,188.32
He will owe $15,188.32 in four years at 8.4% compounded annually, if he makes no payments during those 4 years.
2007-09-30 12:14:53 · answer #2 · answered by truttman 3 · 0⤊ 0⤋
11924 for the first year, 12925.16 the second year,14011.36the third year and 15188.31 the fourth year. But you must also figure that if Frank makes no payments during the four years Tony Soprano will send someone to break both of Frank's legs, thus compounding the problem.
2007-09-30 00:24:16 · answer #3 · answered by fasteddie 1 · 1⤊ 0⤋
11,000 X 8.4% OR .084+ X 1 THEN TOTAL X 8.4% THEN TOTAL X 8.4% AGAIN TOTAL X8.4% AGAIN= NET OWING.
NO PAYMENTS BECAUSE PAYMENTS ARE DEFERRED DURING SCHOOL AND NO JOB--
2007-09-30 00:21:50 · answer #4 · answered by ahsoasho2u2 7 · 0⤊ 0⤋
15188.322
11000* .084 = 924
11924*.084 = 1001.616
12925.616*.084 = 1085.752
14011.367*.084 = 1176.95
2007-09-30 00:56:15 · answer #5 · answered by broker90212 2 · 0⤊ 0⤋