Question

If joan borrows a $10,000 loan at 5.5% interest, and pays it back in 36 months, how much will she pay back in total? use simple interest.

a) $10,000
b) More than $10,000 but less than $11,000
c) More than $11,000 but less than $12,000
d) More than $12,000 but less than $13,000

Answer 1

Joan will pay a total of $11,650 for her $10,000 loan which includes $1,650 in simple interest. Choosing option c) is correct.

Step-by-step explanation:

To calculate how much Joan will pay back in total for her loan, we use the formula for calculating simple interest, which is I = PRT, where I is the interest, P is the principal amount (the initial amount of the loan), R is the annual interest rate (expressed as a decimal), and T is the time in years.

In this case, Joan's principal P is $10,000, her annual interest rate R is 5.5% or 0.055 when expressed as a decimal, and the time T is 3 years (since 36 months is equivalent to 3 years).

Using the simple interest formula, we calculate the interest Joan will pay:
I = PRT
I = $10,000 * 0.055 * 3
I =$1,650

Now, to find the total amount Joan will pay back, we add the interest to the principal:
Total amount = Principal + Interest
Total amount = $10,000 + $1,650
Total amount = $11,650

Therefore, Joan will pay back more than $11,000 but less than $12,000, so the correct answer is c) More than $11,000 but less than $12,000.