The total amount of money that we need to pay back after 3 years for a $3000 loan is $3993 . Find the compound interest rate of the loan.
We start with the compound interest formula:
With A=3993, r=0.1 and n=3, we can substitute these values into the formula as shown:
Now we have, 1.331P = 3993. To find P, we need to remove 1.331. To do so, we divide both sides of the equation with 1.331. This is shown below:
Finally, we have P = $3000. Clearly, the answer is B.
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