Question

Owen has a loan for $3700 at a rate of 5% annually. If the interest is not compounded, what is the total amount of repayment if the loan is for 7 years? A) $1295.00 B) $3700.00 C) $3885.00 D) $4995.00

Answer 1

Answer: The total amount of repayment is $4995 (option D).

Explanation:

Hi, to solve this problem we have to calculate the value of the interest for each year.

So:

• $3700 x 0.05 = $185

We have calculated the value of the interest for each year. The next step is to multiply by 7 years.

• $185 x 7 =$1295

Finally, we simply add the result to the value of the loan:

• $3700+$1295= $4995

The total amount of repayment is $4995 (option D).

Feel free to ask for more if it´s necessary or if you did not understand something.