Question

Carina is borrowing $27,000 to buy a new car. If she borrows the money at 4.15% interest compounded annually for 5 years, how much interest will she pay on her car loan?

$33,087.21
$6,087.21
$1,120.50
$5,602.50

Answer 1

She will have to pay $6,087.21 in interest

Answer 2

NO, the these three border pieces will not make a right triangle

Explanation:

Use the compound amount formula A = P(1 + r)^t:

Here A = ($27,000)(1 + 0.0415)^5

A = ($27,000)(1.0415)^5 = $33,087.21

Subtracting the principal amount, $27,000, leaves the compound interest amount: $33,087.21 - $27,000 = $6087.21

She will pay $6,087.21 interest on this loan.