Question

You take out a loan from the bank for $4350. The bank charges an annual simple Interest rate of 15% and you are going to pay the loan back in 4 years. What is the total you will pay back to the bank for the loan?

Answer 1

The total amount to be paid back to the bank is $6,960

Here, we want to calculate the amount that would be paid back to the bank at the end of the loan tenor

To know the amount, we are going to add up the principal and the accurred interest

The principal refer to the amount borrowed which is $4,350

To calculate the interest, we are going to use the simple interest formula

Mathematically, we have that as;

`I\text{ = }(PRT)/(100)`

where;

P represents the principal which is $4,350

R represents the rate which is 15%

T is the time which is 4 years

Substituting these values, we have;

`\begin{gathered} I\text{ = }(4350*15*4)/(100) \\ I\text{ =\$2,610} \end{gathered}`

The amount to be paid back is;

`\begin{gathered} \text{Amount = Principal + interest} \\ \text{Amount = 4350 + 2610 = \$6,960} \end{gathered}`