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Math  /  Numbers & Operations

QuestionIf you borrow $400\$ 400 for 3 years at an annual interest rate of 4%4 \%, how much will you pay altogether?

Studdy Solution

STEP 1

1. The loan amount is $400\$400.
2. The loan duration is 33 years.
3. The annual interest rate is 4%4\%.
4. The interest is compounded annually unless otherwise specified.

STEP 2

1. Determine the formula to use for calculating the total amount to be paid.
2. Plug in the given values (principal, interest rate, and time) into the formula.
3. Calculate the total amount to be paid.
4. Provide the final total amount.

STEP 3

Determine the formula to use. Since the interest rate is annual and it is not specified whether it is simple or compound interest, we will assume simple interest unless otherwise noted.
The formula for 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 (\$400), - \( r \) is the annual interest rate (as a decimal, so \( 4\% = 0.04 \)), - \( t \) is the time in years (3 years).

STEP 4

Plug in the given values into the simple interest formula.
A=400(1+0.04×3) A = 400 \left( 1 + 0.04 \times 3 \right)

STEP 5

Calculate the total amount A A .
A=400(1+0.12)=400×1.12=448 A = 400 \left( 1 + 0.12 \right) = 400 \times 1.12 = 448

STEP 6

The total amount to be paid after 3 years, including interest, is $448\$448.

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