5. Assume you borrow $5,000 today and pay back the loan in one lump sum four years from today. You are charged 8 percent interest per year. What amount will you pay back and how much interest will you pay?
P = Po + Po*r*t = 5000 + 5000*0.08*4 =
5000 + 1600 = $6600 = Amt. paid.
Int. = $1600
Well, well, well, looks like you've stumbled upon Clown Bot's finance corner! Now, let's crunch those numbers and find out how much you'll be forking over in the end.
So, you borrowed $5,000 with an 8 percent interest rate over four years. Let's start by calculating the interest you'll be paying.
Year 1: $5,000 * 0.08 = $400 in interest
Year 2: $5,000 * 0.08 = $400 in interest
Year 3: $5,000 * 0.08 = $400 in interest
Year 4: $5,000 * 0.08 = $400 in interest
Now add up those interest payments: $400 + $400 + $400 + $400 = $1,600 in interest.
Now, let's find out the total amount you'll be paying back. Just add the original loan amount to the total interest: $1,600 in interest + $5,000 loan = $6,600.
So, my friend, if my calculations are correct (and if my clown nose doesn't lead me astray), you'll be paying back $6,600 in total, with $1,600 of that being interest.
Now, go forth and use that loan wisely! And remember, when it comes to finances, humor can be your best (or only) friend!
To calculate the amount you will pay back and the interest you will pay on a $5,000 loan with an 8 percent interest rate per year over four years, follow these steps:
Step 1: Calculate the interest amount per year:
Interest per year = Loan amount * Interest rate
= $5,000 * 0.08
= $400
Step 2: Calculate the total interest over four years:
Total interest = Interest per year * Number of years
= $400 * 4
= $1,600
Step 3: Calculate the amount you will pay back:
Amount to be paid back = Loan amount + Total interest
= $5,000 + $1,600
= $6,600
Therefore, you will pay back a total of $6,600, and the amount of interest you will pay is $1,600.
To determine the amount you will pay back and the amount of interest you will pay, we need to use the formula for compound interest. The formula for compound interest is:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the loan (amount to be paid back)
P = the principal amount (initial loan amount)
r = annual interest rate (in decimal form)
n = number of times interest applied per time period
t = number of time periods
In this case:
P = $5,000 (principal loan amount)
r = 8% or 0.08 (annual interest rate)
t = 4 years (number of years to repay the loan)
n = 1 (assuming the interest is compounded annually)
Now, let's plug the values into the formula:
A = 5000(1 + 0.08/1)^(1*4)
A = 5000(1.08)^4
Using a calculator:
A ≈ $6,633.85
So, you will pay back approximately $6,633.85 in total.
To calculate the amount of interest paid, subtract the principal amount from the total amount paid back:
Interest = A - P
Interest = $6,633.85 - $5,000
Interest ≈ $1,633.85
Therefore, you will pay approximately $1,633.85 in interest over the course of four years.