to go on a summer trip, boris borrows $600. he makes no payments until the end of 5 years, when he pays off…

to go on a summer trip, boris borrows $600. he makes no payments until the end of 5 years, when he pays off the entire loan. the lender charges simple interest at an annual rate of 2%. answer the following questions. if necessary, refer to the list of financial formulas. (a) how much total interest will boris have to pay? (b) what will the total repayment amount be (including interest)?

to go on a summer trip, boris borrows $600. he makes no payments until the end of 5 years, when he pays off the entire loan. the lender charges simple interest at an annual rate of 2%. answer the following questions. if necessary, refer to the list of financial formulas. (a) how much total interest will boris have to pay? (b) what will the total repayment amount be (including interest)?

Answer

Explanation:

Step1: Recall simple - interest formula

The simple - interest formula is $I = Prt$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years. Given $P=$600$, $r = 0.02$ (since $2%=0.02$), and $t = 5$ years. $I=Prt=600\times0.02\times5$

Step2: Calculate the interest

$I = 600\times0.02\times5=60$

Step3: Calculate the total repayment amount

The total repayment amount $A$ is the sum of the principal $P$ and the interest $I$. So $A=P + I$. Since $P = 600$ and $I = 60$, then $A=600 + 60=660$

Answer:

(a) $60 (b) $660