Answer:
a) To calculate how much Vanessa will have to pay back after 2 years, we need to add the interest to the principal.
The interest can be calculated using the simple interest formula:
Interest = Principal x Rate x Time
where,
Principal = $5,000 (the amount borrowed)
Rate = 4% (expressed as a decimal, 0.04)
Time = 2 years
So,
Interest = $5,000 x 0.04 x 2
Interest = $400
The total amount Vanessa will have to pay back is the sum of the principal and the interest:
Total amount = Principal + Interest
Total amount = $5,000 + $400
Total amount = $5,400
Therefore, Vanessa will have to pay $5,400 after 2 years.
b) To calculate how much interest Vanessa will pay, we can use the same formula for simple interest:
Interest = Principal x Rate x Time
Plugging in the given values, we get:
Interest = $5,000 x 0.04 x 2
Interest = $400
Therefore, Vanessa will pay $400 in interest over the 2-year period.