Question

Clara borrows $2,000 from a good friend. She agrees to pay 3% annual interest compounded biannually for 52 months. She does not make any early payments and is not charged any fees.

How much does Clara pay in interest?

(1 point)
Clara pays $
in interest.

Answer 1

Interest = 2000[(1 + 0.03/2)^{2*(52/12)} − 1].

t = 52/12 years, so
A = 2000(1.015)^{104/12} ≈ 2000(1.1377295) ≈ 2275.46.

Interest = 2275.46 − 2000 = $275.46.