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Math  /  Numbers & Operations

QuestionIf you borrow $900\$ 900 for 4 years at an annual interest rate of 5%5 \%, how much will you pay altogether?

Studdy Solution

STEP 1

1. The loan of $900\$900 is borrowed for a term of 4 years.
2. The annual interest rate is 5%5\%.
3. The interest is compounded annually (assuming simple interest unless otherwise stated).

STEP 2

1. Determine the formula for calculating the total amount to be paid with simple interest.
2. Substitute the given values (principal, rate, and time) into the formula.
3. Compute the total interest.
4. Calculate the total amount to be paid by summing the principal and the total interest.

STEP 3

The formula for calculating the total amount to be paid using simple interest is: A=P(1+rt) A = P(1 + rt) where: - A A is the total amount to be paid, - P P is the principal amount, - r r is the annual interest rate (in decimal form), - t t is the time in years.

STEP 4

Substitute the given values into the formula: P=900,r=0.05,t=4 P = 900, \quad r = 0.05, \quad t = 4
A=900×(1+0.05×4) A = 900 \times (1 + 0.05 \times 4)

STEP 5

Calculate the total interest: 1+0.05×4=1+0.2=1.2 1 + 0.05 \times 4 = 1 + 0.2 = 1.2

STEP 6

Calculate the total amount to be paid: A=900×1.2=1080 A = 900 \times 1.2 = 1080
Solution: The total amount to be paid altogether is $1080\$1080.

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