Question

a business owner receives a $5,000 loan with 13% interest, charged at the end of each year.

1. select an equation to represent the amount owed, in dollars, after the given number of years of making no payments after 2 years.

$y = 5000(0.13)^2$
$y = 5000(1.13)^2$
$y = 1.13(5000)^2$
$y = 5000(0.83)^2$
$y = 5000(13)^2$

Explanation:

Step1: Identify compound interest formula

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

Step2: Plug in given values

Here, $P = 5000$, $r = 0.13$, $t = 2$. Substitute into formula:
$y = 5000(1 + 0.13)^2 = 5000(1.13)^2$

Answer:

$y = 5000(1.13)^2$