QuestionHow much will you pay in total if you borrow \$600 for 2 years at a 7% annual interest rate?

Studdy Solution

STEP 1

Assumptions1. The borrowed amount is $600. The annual interest rate is7%
3. The time for repayment is years4. The interest is calculated as a one-time payment, not yearly compounding5. The total payment includes both the principal amount and interest

STEP 2

First, we need to find the interest amount on the borrowed sum. We can do this by multiplying the borrowed amount by the interest rate and the time.
$Interest = Borrowed\, amount \\times Interest\, rate \\times Time$

STEP 3

Now, plug in the given values for the borrowed amount, interest rate, and time to calculate the interest.
$Interest = \$600 \\times7\% \\times2$

STEP 4

Convert the percentage to a decimal value.
$7\% =0.07$ $Interest = \$600 \\times0.07 \\times2$

STEP 5

Calculate the interest amount.
$Interest = \$600 \\times0.07 \\times2 = \$84$

STEP 6

Now that we have the interest amount, we can find the total amount to be paid back. This includes both the borrowed amount and the interest.
$Total\, amount = Borrowed\, amount + Interest$

STEP 7

Plug in the values for the borrowed amount and the interest to calculate the total amount.
$Total\, amount = \$600 + \$84$

STEP 8

Calculate the total amount to be paid back.
$Total\, amount = \$600 + \$84 = \$684$ You will pay a total of $684.

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