Question

Martha borrows $1200 to buy a desk. She will pay off the loan by paying 2.3% simple interest for 4 years. Martha incorrectly calculates the amount she will pay back using the expression below: 1200(1.023 x 4). What is the correct amount Martha will pay back altogether?

Answer 1

Martha will pay back a total of $1310.4.

Step-by-step explanation:

Martha borrows $1200 to buy a desk and will pay off the loan by paying 2.3% simple interest for 4 years. However, her calculation of $1200(1.023 x 4) is incorrect. To calculate the correct amount she will pay back, we need to use the formula:

Amount = Principal + (Principal x Rate x Time)

Substituting the given values, we have:

Amount = 1200 + (1200 x 0.023 x 4) = $1200 + $110.4 = $1310.4.