Question

Rayburn’s dad offered to loan him $1,000 to buy a car with an annual interest rate of 7%. assuming he pays his dad back at the end of one year, how much will he have paid for the car?

Answer 1

Rayburn will have paid $1,070 for the car, including both the principal loan amount and the interest.

Step-by-step explanation:

To calculate the amount Rayburn will have paid for the car, we first need to calculate the interest on the loan. The interest can be calculated using the formula:

Interest = Principal * Rate * Time

Here, the Principal is $1,000, the Rate is 7% (or 0.07), and the Time is 1 year. Plugging in these values:

Interest = $1,000 * 0.07 * 1 = $70

So, Rayburn will pay $70 in interest. Adding this to the principal loan amount gives us the total amount paid for the car:

Total Amount Paid = Principal + Interest = $1,000 + $70 = $1,070