Question

Find the total amount of money​ (maturity value) that the borrower will pay back on a loan of ​$1 comma 760 at 13 and one half % simple interest for 10 years.

Answer 1

The borrower will pay back $4,136.

Explanation:

This is a simple interest problem.

The simple interest formula is given by:

`E = P*I*t`

In which E are the earnings, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.

After t years, the total amount of money is:

`T = E + P`.

In this question:

Loan amount of 1760, so
`P = 1760`

Interest rate of 13 and one half, so 13.5%. This means that
`I = 0.135`.

10 years, so
`t = 10`

Interest on the Loan:

`E = P*I*t = 1760*0.135*10 = 2376`

Total amount:

`T = E + P = 2376 + 1760 = 4136`

The borrower will pay back $4,136.