Question

You have a one year loan which charges 6.5% interest. You have borrowed $25,000.00 and want to know how much money you will have paid at the end of the year including the original money you borrowed. Q1: How much money will you have paid at the end of a 12 month period?

Answer 1

We have been given that you  have a one year loan which charges 6.5% interest. You have borrowed $25,000.00. We are asked to find the amount of money that you will pay at the end of the year including the original money you borrowed.

We will use simple interest formula to solve our given problem.

$A=P(1+rt)$, where,

A = Final amount after t years,

P = Principal amount,

r = Annual interest rate in decimal form,

t = Time in years.

$6.5\%=\frac{6.5}{100}=0.065$

Upon substituting our given values in simple interest formula, we will get:

$A=\ 25,000(1+0.065\cdot 1)$

$A=\ 25,000(1+0.065)$

$A=\ 25,000(1.065)$

$A=\ 26,625$

Therefore, you will have to pay $26,625 at the end of the year.