Question

Karly borrowed $6,200 from her parents for 4 years at an annual simple interest rate of 2.8%. How much interest will she pay if she pays the entire loan at the end of the fourth year?

Enter the answer in dollars and cents, and round to the nearest cent, if needed. Do not include the dollar sign. For example, if the answer is $0.61, only the number 0.61 should be entered.

Answer 1

$724.11

Explanation:

This requires the use of the growth formula.

Growth Formula:

`y = a*(1+r)^x`

y = total/answer

a = starting value

r = rate (1.25 = 25%)

x = the amount of time (years/months)

Equation:

`y = 6200 * (1+0.028)^4`

Solving:

y = $6924.11

$6924.11 - $6200 = total interest

$724.11

Answer 2

`~~~~~~ \textit{Simple Interest Earned} \\\\ I = Prt\qquad \begin{cases} I=\textit{interest earned}\\ P=\textit{original amount deposited}\dotfill & \$6200\\ r=rate\to 2.8\%\to (2.8)/(100)\dotfill &0.028\\ t=years\dotfill &4 \end{cases} \\\\\\ I = (6200)(0.028)(4)\implies I=694.4`