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You are borrowing money today at 9.2 percent, compounded annually. You will repay the principal plus all the interest in one lump sum of $12,682 two years from today. How much are you borrowing?

Respuesta :

Answer:

Principal(P) = $10,635(Approx)

Explanation:

Given:

Amount borrowed plus interest (A) = $12,682

Interest rate (r) = 9.2%

Number of years (n) = 2

Find:

Principal(P)

Computation:

[tex]P=\frac{A}{(1+r)^n} \\\\P=\frac{12,682}{(1+0.092)^2} \\\\P=\frac{12,682}{(1.092)^2} \\\\P=\frac{12,682}{(1.192462} \\\\P=10,635.1397[/tex]

Principal(P) = $10,635(Approx)

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