Question

To buy a car, Jessica borrowed $25,000

for 5 years at an annual simple interest
rate of 8%. How much interest will she pay
if she pays the entire loan off at the end
of the third year? What is the total
amount that she will repay?

Answer 1

Jessica will pay $6,000 in interest if she pays off the loan at the end of the third year. The total amount that she will repay is $31,000.

Step-by-step explanation:

To calculate the interest that Jessica will pay if she pays off the loan at the end of the third year, we can use the formula:

Interest = Principal * Rate * Time

Interest = $25,000 * 8% * 3 years = $6,000

Therefore, Jessica will pay $6,000 in interest if she pays off the loan at the end of the third year.

To calculate the total amount that Jessica will repay, we need to add the principal and the interest:

Total amount = Principal + Interest

Total amount = $25,000 + $6,000 = $31,000

Therefore, Jessica will repay a total amount of $31,000.