Question - Calculating Simple Interest and Total Repayment Amount
Solution:
The question involves calculating the simple interest and then determining the total amount of money that the woman has to repay after 4 years.The formula for calculating simple interest is:$$ I = P \times r \times t $$where$$ I $$ is the interest,$$ P $$ is the principal amount (initial loan amount),$$ r $$ is the annual interest rate (in decimal form),$$ t $$ is the time the money is borrowed for, in years.According to the image, the woman borrows $26,000, the interest rate is 3.9%, and the time is 4 years.First, convert the interest rate from a percentage to a decimal by dividing by 100:$$ r = 3.9\% = \frac{3.9}{100} = 0.039 $$Now plug the numbers into the formula:$$ I = P \times r \times t $$$$ I = 26000 \times 0.039 \times 4 $$Now calculate the interest:$$ I = 26000 \times 0.039 \times 4 \\I = 1016 \times 4 \\I = 4064 $$The interest that will be accrued over 4 years is $4,064.Next, to find the total amount that must be repaid, add the interest to the principal amount:$$ Total = P + I $$$$ Total = 26000 + 4064 $$$$ Total = 30064 $$The woman will have to repay a total of $30,064 after 4 years.
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