Question

Taylor’s dad offered to loan her $1,500 to buy a car with an annual interest rate of 15 percent. Assuming she pays her dad back at the end of one year, how much will she have paid for the car?

Answer 1

$1,725

Explanation:

Given that

The loan amount is $1,500

The interest rate is 15%

And, the time period is one year

We need to find out the future value

so,

The future value = present value × (1 + rate of interest)^number of years

= $1,500 × (1 + 0.15)^1

= $1,500 × 1.15

= $1,725