Julie took out a loan for college for 25,000. If the interest rate is compounded annual 5% what is the total amount of money julie will owe after four years

Answer 1

To calculate the total amount of money Julie will owe after four years, we need to use the compound interest formula:

A = P(1 + r/n)^(nt)

Where:
A = The total amount of money Julie will owe after four years
P = The initial loan amount (25,000)
r = The interest rate (5% or 0.05)
n = The number of times the interest is compounded per year (in this case it is annually, so n = 1)
t = The number of years (4)

Plugging in the values into the formula:

A = 25,000(1 + 0.05/1)^(1*4)
A = 25,000(1 + 0.05)^4
A = 25,000(1.05)^4
A = 25,000(1.2155)

Calculating the final amount:

A = $30,387.50

So, Julie will owe approximately $30,387.50 after four years.