Question

How ur 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 need to pay back at the end of one year, including the interest is $26,000

Given:

Interest rate = 4%

Cost of car = $25,000

Time = 1 year

Amount of interest = Principal × Rate × Time

= 25,000 × 4% × 1

= 25,000 × 0.04 × 1

= $1,000

Amount to be paid = Amount of interest + Cost of car

= 1,000 + 25,000

= $26,000

Therefore, the amount Howie need to pay back at the end of one year, including the interest is $26,000

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Answer 2

The amount that Howie would need to pay back at the end of one year, including the interest for a car loan of $25,000 is $26,000.

What is simple interest?

Simple interest is a finance charge that does not compound.  It is calculated on the principal portion of a loan only.

The formula for computing simple interest is Principal x APR x Number of years.

Data and Calculations:

Car loan = $25,000

Simple interest rate = 4%

Period of loan = 1 year

Principal + Interest for 1 year = $26,000 ($25,000 x 4% x 1).

Thus, the amount that Howie would need to pay back at the end of one year, including the interest for a car loan of $25,000 is $26,000.

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