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A firm has borrowed $5,000,000 for 5 years at 10% per year compound interest (compounded yearly). The firm will make no payments until the loan is due, when it will pay off the interest the interest and principal in one lump sum. What is the total payment?

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Tundexi

Answer:

The firm will pay $8,052,550 in lump sum after 5 years

Explanation:

A = P(1+r)^n

A= 5,000,000 * (1+0.10)^5

A= 5,000,000 * (1.10)^5

A= 5,000,000 * 1.61051

A= 8,052,550

Thus, the firm will pay $8,052,550 in lump sum after 5 years

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