Jenny borrowed $500 for 5 years at 4% interest compounded annually. what is the total amount she will have paid when she pays off the loan?

Use the formula for compound interest,  
  
 
  
Where P is the starting amount (500$), r is the rate of interest (0.04), n is the number of times the interest is compounded per unit (1 per year), and t is the amount of time it is compounded (5 years).  
  
Now, plug it into the formula:  
  
 
  
Do the math, and your answer is she must pay 608.32$ when she pays her debts.

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