Jessica borrowed $8,500.00 from the credit union to purchase a used car. The credit union gave her a rate of 7.5% annually for a period of 2 ½ years. What is the total amount she will have to pay back at the end of the loan?
Choose the best answer from the options below:
A $9,093.75
B $10,093.75
C $11,093.75
D $12,093.75
To find the total amount to be paid back, we need to calculate the interest and add it to the principal amount borrowed.
The interest is calculated using the formula: Interest = Principal * Rate * Time
First, let's convert 2 ½ years into a decimal. 2 ½ years is equal to 2 + 0.5 years, which is equal to 2 + 0.5/1 = 2.5 years.
Now we can plug the values into the formula:
Interest = $8,500.00 * 0.075 * 2.5
Interest = $1,593.75
Now we can calculate the total amount to be paid back by adding the interest to the principal amount:
Total amount = Principal + Interest
Total amount = $8,500.00 + $1,593.75
Total amount = $10,093.75
Therefore, the total amount she will have to pay back at the end of the loan is $10,093.75.
The correct answer is B. $10,093.75.
To calculate the total amount Jessica will have to pay back at the end of the loan, we need to calculate the interest on the loan and add it to the principal amount.
First, let's calculate the interest:
Principal amount = $8,500.00
Rate = 7.5%
Time = 2 ½ years
Convert 2 ½ years into months:
2 ½ years = 2 * 12 months + 6 months = 24 + 6 = 30 months
Interest = (Principal amount * Rate * Time) / 100
Interest = ($8,500.00 * 7.5% * 30) / 100
Interest = $1,912.50
Now, let's calculate the total amount Jessica will have to pay back:
Total amount = Principal amount + Interest
Total amount = $8,500.00 + $1,912.50
Total amount = $10,412.50
The correct answer is B. $10,093.75