Question

Fiona borrows $5,000 to help pay for a car. The interest rate on the loan is 7.5%. She plans to pay back the loan in 3 years. How much will she have to pay back in TOTAL at the end of the 3 years? Show your work!

Answer 1

Total amount = $6125

Explanation:

Given the following data;

Principal = $5000

Interest rate = 7.5%

Time = 3 years

To find the simple interest;

Mathematically, simple interest is calculated using this formula;

`S.I = \frac {PRT}{100}`

Where;

S.I is simple interest.

P is the principal.

R is the interest rate.

T is the time.

Substituting into the equation, we have;

`S.I = \frac {5000 * 7.5 * 3}{100}`

`S.I = \frac {112500}{100}`

S.I = $1125

Next, we find the total amount to be paid back;

Total amount = principal + simple interest

Total amount = 5000 + 1125

Total amount = $6125