Question

John wants to open a showroom and borrows $48,000 on a 12% simple interest rate. He plans to pay this after 4 years. What will the total principal + interest payment be?

a) $57,600
b) $54,000
c) $64,000
d) $50,400

Answer 1

After calculating the simple interest John owes on a $48,000 loan over 4 years at a rate of 12%, it turns out he will have to pay back a total of $71,040. However, this total does not match any of the answer choices provided, suggesting there may be an error in the problem or options.

Step-by-step explanation:

To calculate the total amount that John will need to pay back after 4 years, including principal and interest, we will use the formula for simple interest: Interest = Principal × rate × time. In this case, the principal is $48,000, the rate is 12%, and time is 4 years.

The calculation of interest is as follows:
Interest = $48,000 × 0.12 × 4 = $23,040.

We then add the interest to the original principal to find the total repayment amount:
Total repayment = Principal + Interest = $48,000 + $23,040 = $71,040.

Since none of the provided options match this figure, there may be a mistake either in the question or the options given. It is important to double-check the figures and the question to ensure the calculations are correct.