Final answer:
To clear a $12,000 debt at an 11.5% annual simple interest rate after 3 years, the total repayment would be $16,140, which includes $4,140 in interest.
Step-by-step explanation:
To calculate the total amount that must be repaid on a loan at a given simple interest rate, you can use the formula:
Simple Interest (I) = Principal (P) × Interest Rate (r) × Time (t)
For a $12,000 loan at an 11.5% annual interest rate over 3 years, the simple interest would be:
Simple Interest = $12,000 × 11.5% × 3
Simple Interest = $12,000 × 0.115 × 3
Simple Interest = $4,140
To find the total amount to be repaid, Add the simple interest to the principal:
Total Repayment = Principal + Simple Interest
Total Repayment = $12,000 + $4,140
Total Repayment = $16,140
Hence, at the end of 3 years, the person would have to pay $16,140 to clear the debt.