Question

A bank offers an annual simple interest rate of 8% on home improvement loans. How much would John owe if he borrowed $17,000 over a period of two years? Explain how to solve in full sentences.

A. $17,000
B. $17,360
C. $18,360
D. $19,000

Answer 1

To calculate the amount John would owe after borrowing $17,000 over a period of two years with a simple interest rate of 8%, we can use the formula: Amount owed = Principal + Simple Interest. Plugging in the values, we can calculate that John would owe $19,720.

Step-by-step explanation:

To calculate the amount John would owe after borrowing $17,000 over a period of two years with a simple interest rate of 8%, we can use the formula:

Amount owed = Principal (borrowed amount) + Simple Interest

Simple Interest = Principal * Rate * Time

Plugging in the values, we have:

Principal = $17,000

Rate = 8% or 0.08

Time = 2 years

Simple Interest = $17,000 * 0.08 * 2 = $2,720

Amount owed = $17,000 + $2,720 = $19,720

Therefore, John would owe $19,720 if he borrowed $17,000 over a period of two years.