Question

Consumer Math TestYou borrow $13,000 to buy a car. You borrow the money for 4 years and the interest rate is 2.5%. How much interest will you pay? And what is the final price of the car?

Answer 1

You will pay $1,300 in interest.

The final price of the car is of $14,300

Explanation:

Simple interest formula:

`I=P\ast r\ast t`

In which:

I is the interest

P is the principal(initial value of the investment, amount borrowed,...)

r is the interest rate, as a decimal

t is the time, in years.

In this question:

Borrow $13,000, so P = 13000

4 years, so t = 4

Interest rate of 2.5%, so r = 0.025

`I=13000\ast0.025\ast4=1300`

You will pay $1,300 in interest.

Final price of the car:

Principal plus interest.

`T=P+I=13000+1300=14300`

The final price of the car is of $14,300