Nick borrowed $7150, to be repaired at an annual simple interest rate of 6.25%. How much interest will be due after 5 years? How much will Nick have to repay?
5 * .0625 * 7150 = interest due
total = interest due + 7150
I = PRT
I = 7,150 * 0.0625 * 5
I = ?
2,234
To calculate the amount of interest due after 5 years, we need to use the formula for simple interest:
Interest = Principal * Rate * Time
Where:
Principal = the amount borrowed ($7150)
Rate = the annual interest rate expressed as a decimal (6.25% = 0.0625)
Time = the number of years (5 years)
Substituting the values into the formula:
Interest = $7150 * 0.0625 * 5
Interest = $2234.38
Therefore, the interest due after 5 years will be $2234.38.
To calculate the total amount Nick will have to repay, we add the interest to the principal:
Total Repayment = Principal + Interest
Total Repayment = $7150 + $2234.38
Total Repayment = $9384.38
Therefore, Nick will have to repay a total of $9384.38.