Question

To go on a summer trip, Dante borrows $200. He makes no payments until the end of 3 years, when he pays off the entire loan. The lender charges simple interest at an annual rate of 3%. Answer the following questions. If necessary, refer to the list of financial formulas.

A.How much total interest will Dante have to pay?
B.What will the total repayment amount be (including interest)?

Answer 1

Dante will pay $18 in total interest on his $200 loan, and his total repayment amount including interest will be $218.

Step-by-step explanation:

To calculate the total interest Dante will have to pay on his $200 loan, we use the simple interest formula: I = PRT, where I is the interest, P is the principal amount ($200), R is the rate of interest per year (3%), and T is the time the money is borrowed (3 years). In this case, I = $200 × 0.03 × 3 = $18. Therefore, Dante will have to pay $18 in interest.

The total repayment amount including interest is the sum of the principal and the interest paid. So, the total repayment amount is $200 + $18 = $218.