Tonya took out a loan to help pay for her house. She borrowed $40,000 for 15 years at a yearly simple interest rate of 5%. How much interest will she end up paying the bank?
To calculate the total interest Tonya will end up paying, we can use the formula for simple interest:
Interest = Principal x Rate x Time
Where:
Principal = $40,000
Rate = 5% (0.05 as a decimal)
Time = 15 years
Interest = $40,000 x 0.05 x 15
Interest = $40,000 x 0.75
Interest = $30,000
Tonya will end up paying $30,000 in interest to the bank over the 15-year term of the loan.