Question

Hunter plans to borrow $5,500 from the bank to purchase a used vehicle. If he borrows the money at a rate of 3% interest for 4 years, what is the total amount he will have to pay back to the bank?

Answer 1

Answer: $ 6160

Explanation:

Total money he will pay back = Principal + Interest

Simple interest = Principal x Rate x Time

i.e. Total amount need to pay = Principal + (Principal x Rate x Time)

= Principal (1+ Rate x Time)

Given: Principal = $5,500, Rate = 3%=0.03 , Time = 4 years

Total amount need to pay =
`5500(1+(0.03)(4))`

`= 5500(1+0.12)\\= 5500(1.12)\\=\$6160`

Hence, the total amount he will have to pay back to the bank = $ 6160