Question

What is the total repayment amount for a $2,400 loan borrowed at 12% interest over 4 years?

Answer 1

To calculate the total repayment amount for a loan, you can use the formula for simple interest:

\[
\text{Total Amount} = P + I
\]

Where:
- \( P \) is the principal amount (the initial loan amount),
- \( I \) is the interest earned or paid over the time the loan is outstanding.

The interest \( I \) can be calculated using the formula:

\[
I = P \times r \times t
\]

Where:
- \( r \) is the annual interest rate (as a decimal),
- \( t \) is the time in years.

Given:
- \( P = 2400 \)
- \( r = 0.12 \) (12% as a decimal)
- \( t = 4 \)

Now calculate the interest:

\[
I = 2400 \times 0.12 \times 4
\]
\[
I = 2400 \times 0.48
\]
\[
I = 1152
\]

Now, calculate the total amount to be repaid:

\[
\text{Total Amount} = P + I = 2400 + 1152 = 3552
\]

Thus, the total repayment amount for the loan is **$3,552**.