Questions: To go on a summer trip, Deshaun borrows 200. 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 6%.
Answer the following questions. If necessary, refer to the list of financial formulas.
(a) How much total interest will Deshaun have to pay?
I
(b) What will the total repayment amount be (including interest)?
Transcript text: To go on a summer trip, Deshaun borrows $\$ 200$. 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 $6 \%$.
Answer the following questions. If necessary, refer to the list of financial formulas.
(a) How much total interest will Deshaun have to pay?
\$IÏ
(b) What will the total repayment amount be (including interest)?
$\$ \square$
Solution
Solution Steps
Step 1: Calculate Total Interest
To calculate the total interest on the loan, we use the formula for simple interest: $I = P \times r \times t$.
Substituting the given values: $I = 200 \times 0.06 \times 5 = 60$.
Step 2: Calculate Total Repayment Amount
The total repayment amount is calculated by adding the total interest to the principal: $Total = P + I$.
Substituting the values: $Total = 200 + 60 = 260$.
Final Answer:
The total interest is $60$, and the total repayment amount is $260$.