Amount owed at the end of 1 year is 3640
Given that yoko borrows $3500.
Rate of interest charged is 4% compounded each year
Need to determine amount owed at the end of 1 year.
In our case :
Borrowed Amount that is principal P = $3500
Rate of interest r = 4%
Duration = 1 year and as it is compounded yearly, number of times interest calculated in 1 year n = 1
Formula for Amount of compounded yearly is as follows:
[tex]A=p\left(1+\frac{r}{100}\right)^{n}[/tex]
Where "p" is the principal
"r" is the rate of interest
"n" is the number of years
Substituting the values in above formula we get
[tex]\mathrm{A}=3500\left(1+\frac{4}{100}\right)^{1}[/tex]
[tex]\begin{array}{l}{A=\frac{3500 \times 104}{100}} \\\\ {A=35 \times 104} \\\\ {A=3640}\end{array}[/tex]
Hence amount owed at the end of 1 year is 3640
