Question

suppose pablo borrows $9000 at an interest rate of 13% compounded each year.
assume that no payments are made on the loan.
follow the instructions below. do not do any rounding.
(a) find the amount owed at the end of 1 year.
$
(b) find the amount owed at the end of 2 years.
$

Explanation:

Step1: Define compound interest formula

The formula for compound interest (annual compounding) is $A = P(1 + r)^t$, where $P$ is principal, $r$ is annual interest rate, $t$ is time in years, and $A$ is the amount owed. Here, $P = 9000$, $r = 0.13$.

Step2: Calculate amount after 1 year

Substitute $t=1$ into the formula.
$A = 9000(1 + 0.13)^1 = 9000 \times 1.13$

Step3: Calculate amount after 2 years

Substitute $t=2$ into the formula.
$A = 9000(1 + 0.13)^2 = 9000 \times (1.13)^2 = 9000 \times 1.2769$

Answer:

(a) $\$10170$
(b) $\$11492.1$