Question

1. Beyonce went to the mall and saw a massage chair that she would have to take a loan out for $6,500 to purchase. The bank said that she could get a simple interest rate of 8% for 5 years. What is the TOTAL amount that Beyonce will pay for the chair? * O $2,600 $910 O $9,100 O $260

Answer 1

The simple interest formula is:

`i=\text{Prt}`

Where

i is the interest earned

P is the initial (loan) amount

r is the rate of interest

t is the time

Given,

P = 6500

r = 8%, or, 8/100 = 0.08

t = 5

Substituting, we get:

`\begin{gathered} i=\text{Prt} \\ i=6500*0.08*5 \\ i=2600 \end{gathered}`

This is only the interest. Beyonce would need to pay the original (6500) plus this interest (2600) in total. Thus, she will have to pay:

`6500+2600=9100`