Question

tom bond borrowed $6,600 at 6\frac{1}{2}\\% for three years compounded annually. what is the compound amount of the loan and how much interest will he pay on the loan? compound amount = $ (round to the nearest cent as needed.)

Explanation:

Step1: Identify the compound - interest formula

The compound - interest formula is $A = P(1 + r)^n$, where $A$ is the compound amount, $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $n$ is the number of years.
Given that $P=\$6600$, $r = 6.5\%=0.065$, and $n = 3$.

Step2: Substitute the values into the formula

$A=6600\times(1 + 0.065)^3$.
First, calculate $(1 + 0.065)^3=(1.065)^3=1.065\times1.065\times1.065 = 1.207949625$.
Then, $A = 6600\times1.207949625=\$7972.467525$.

Step3: Round the result

Rounding to the nearest cent, $A\approx\$7972.47$.

Answer:

$7972.47$