Question

Understanding Interest Quick Check
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Question
Calculate the final loan amount of a $22,500 auto loan with a 3.2% simple interest rate over a 5-year term.(1 point)
Responses

$72,000
$72,000

$26,100
$26,100

$58,500
$58,500

$3,600

Answer 1

To calculate the final loan amount of the auto loan, you can use the formula for simple interest:

\[
\text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time}
\]

Where:
- Principal = $22,500
- Rate = 3.2% = 0.032
- Time = 5 years

Now, plug in the values:

\[
\text{Interest} = 22,500 \times 0.032 \times 5
\]
\[
\text{Interest} = 22,500 \times 0.16
\]
\[
\text{Interest} = 3,600
\]

Now, add the interest to the principal to find the final loan amount:

\[
\text{Final Loan Amount} = \text{Principal} + \text{Interest}
\]
\[
\text{Final Loan Amount} = 22,500 + 3,600
\]
\[
\text{Final Loan Amount} = 26,100
\]

Therefore, the final loan amount is **$26,100**.