Calculate the total amount of money that we need to pay back for a $2500 loan with a compounding interest rate of 20%. The duration of the loan is 2 years.
We start with the compound interest formula:
With P=5000, r=0.2 and n=2, we can substitute these values into the formula as shown:
The total amount that we need to pay back is $6655. Hence, the answer is C.
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