Question

Suppose you borrow $8050 for a term of nine years at simple interest and 3 3/5% apr. How much is the total (principal plus interest) you must pay back on the loan?

Answer 1

To calculate the total amount you must pay back on a loan with simple interest, use the formula: Total amount = Principal + (Principal × rate × time). Plugging the given values into the formula gives a total amount of $10,601.25 on the loan.

Step-by-step explanation:

To calculate the total amount you must pay back on a loan with simple interest, you can use the formula:

Total amount = Principal + (Principal × rate × time)

In this case, the principal is $8050, the rate is 3 3/5% or 0.035, and the time is 9 years. Plugging these values into the formula gives: Total amount = $8050 + ($8050 × 0.035 × 9) = $8050 + $2551.25 = $10601.25

Therefore, the total amount you must pay back on the loan is $10,601.25.