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Jenny borrowed $8000 at a rate of 9%, compounded semiannually. Assuming she makes no payments, how much will she owe after 10Do not round any intermediate computations, and round your answer to the nearest cent.

Jenny borrowed 8000 at a rate of 9 compounded semiannually Assuming she makes no payments how much will she owe after 10Do not round any intermediate computatio class=

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SOLUTION

We will use the formula

[tex]\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ where\text{ } \\ A=amount\text{ after 10 years = ?} \\ P=money\text{ borrowed = \$8,000} \\ r=9\%=\frac{9}{100}=0.09 \\ t=time\text{ in years = 10} \\ n=compounding=semi-annualy=2 \end{gathered}[/tex]

plugging in, we have

[tex]\begin{gathered} A=8,000(1+\frac{0.09}{2})^{2\times10} \\ A=8,000(1.045)^{20} \\ A=8,000\times2.4117140 \\ A=19,293.7121986 \end{gathered}[/tex]

Hence the answer is $19,293.71

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