Answer:
A) $5,665
B) $5,834.95
Explanation:
We were given that:
Loan, P = $5,500
Interest Rate, r = 3% = 3/100 = 0.03
Compounding, n = annually = 1
Time, t = ?
The amount owed is obtained using the formula:
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]A) At the end of one year:
[tex]\begin{gathered} Time,t=1year \\ A=5500(1+\frac{0.03}{1})^{1*1} \\ A=5500(1+0.03) \\ A=5500(1.03) \\ A=\text{\$}5,665 \end{gathered}[/tex]B) At the end of two years:
[tex]\begin{gathered} Time,t=2years \\ A=5500(1+\frac{0.03}{1})^{1*2} \\ A=5500(1+0.03)^2 \\ A=5500(1.03)^2 \\ A=\text{\$}5,834.95 \end{gathered}[/tex]