Question

Howie wants to get a car loan with 4% simple interest rate. If the car costs $25,000, how much would Howie need to pay back at the end of one year, including the interest?

Answer 1

The amount Howie will pay back at the end of one year is $26000.00

The given parameters are:

$P =25000$ -- the principal amount

$R = 4\%$ -- the interest rate

$T=1$ --- the duration

The amount to pay back in this duration is then calculated using:

$A = P(1 + RT)$

So, we have:

$A = 25000(1 + 4\% \times 1)$

$A = 25000(1 + 4\% )$

Express percentage as decimal

$A = 25000(1 + 0.04)$

$A = 25000(1 .04)$

Multiply

$A = 26000$

Hence, the amount to pay back is $26000.00

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