If lucy borrows the money (20 000) from the bank and agrees to pay it back over four years,how much interest will she pay at an interest rate of 12 percent
well, 12% of 20000 = 2400
so, ...
Missing parts to this question:
- is it simple or compound interest?
(anytime over one year usually involves compound interest)
- if compound interest, how is the rate compounded
- are there period payments?
- do the payment frequency match the compounding frequency?
- are there monthly payments or a single payment at the end?
each of these would result in a different answer.
To calculate the interest Lucy will pay, we need to use the formula for Simple Interest:
Interest = Principal * Rate * Time
Here, the principal is the amount Lucy borrowed, which is $20,000, the rate is 12%, and the time is 4 years.
Step 1: Convert the interest rate from a percentage to a decimal
12% = 12/100 = 0.12
Step 2: Plug the values into the formula
Interest = $20,000 * 0.12 * 4
Step 3: Calculate the interest
Interest = $9,600
Therefore, Lucy will pay $9,600 in interest over the four years.