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Scott borrowed $8000 at a rate of 19%, compounded annually. Assuming he makes no payments, how much will he owe after 8 years? Round your answer to the nearest cent

Sagot :

To answer this question we will use the following formula for compounded interest:

[tex]A=A_0(1+r)^t,[/tex]

where A is the final amount, A₀ is the initial amount, r is the interest rate as a decimal number, and t is the number of times that the interest rate is applied.

Substituting A₀=8000, r=0.19, and t=8 we get:

[tex]A=8000(1+0.19)^8\text{.}[/tex]

Simplifying the above result we get:

[tex]\begin{gathered} A=8000(1.19)^8, \\ A\approx32171.08 \end{gathered}[/tex]

Answer: $32171.08.

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