Question

Fred borrowed $4,000 from a bank to buy a motorcycle. He will pay back the loan in 3 years with simple interest, at an interest rate of 15% per year. What is the total amount the he will pay after 3 years?

Answer 1

To calculate the total amount Fred will pay after 3 years for a $4,000 loan with a 15% interest rate, we need to calculate the simple interest and add it to the principal amount. Using the formula for simple interest, we find that the simple interest is $1,800. Adding the principal amount and the simple interest gives us a total amount of $5,800.

Step-by-step explanation:

To calculate the total amount Fred will pay after 3 years, we need to calculate the simple interest first. The formula for simple interest is:

Simple Interest = Principal x Interest Rate x Time

Using the given information, we have:

Principal (P) = $4,000
Interest Rate (R) = 15% = 0.15
Time (T) = 3 years

Plugging these values into the formula:

Simple Interest = $4,000 x 0.15 x 3 = $1,800

The total amount Fred will pay after 3 years is the sum of the principal amount and the simple interest:

Total Amount = Principal + Simple Interest

Total Amount = $4,000 + $1,800 = $5,800