Question

Mr. Sprockett borrows $3,500 from his bank to buy a used car. The loan has a 7.4% simple interest rate. If it takes Mr. Sprockett two years to pay back the loan, what is the total amount he will be paying?

Answer 1

The total amount that Mr. Sprockett will have to pay will be $ 4,018.

Explanation:

To determine the total amount that Mr. Sprockett will pay for his loan, knowing that the initial principal is $ 3,500, that the interest rate is 7.4%, that the interest is simple (it is not added to the initial capital) and that the duration of the loan is for 2 years, the following calculation must be made:

3,500 + ((3,500 x 0.074) x 2) = X

3,500 + (259 x 2) = X

3,500 + 518 = X

4.018 = X

Thus, the total amount that Mr Sprockett will have to pay will be $ 4,018.