Question

Paul borrowed $2,000 for four months at an annual interest rate of10.25%. How much must he repay at the end of four months?a. $689.44b. $68.33c. $2,068.33d. $2,052.50

Answer 1

The rule of the interest is

`A=P+(n)/(12)rP`

P is the initial amount

n is the number of months

r is the annual rate in decimal

Since Paul borrowed $2000 for 4 months, then

P = 2000

n = 4

Since the annual interest is 10.25%, then

`r=(10.25)/(100)=0.1025`

Substitute them in the rule above

`\begin{gathered} A=2000+2000((4)/(12))(0.1025) \\ A=2068.33333 \end{gathered}`

Round it to the nearest cent

A = 2068.33

Paul must repay $2068.33 at the end of the four months

The answer is C