Question

You secure a loan for $5,050. The simple interest rate is 4.98%. How much will you pay in total on the loan after 4 years?

Use this formula:
FV=PV(1+rt)


Enter the dollar amount rounded to the nearest cent.

Answer 1

To calculate the total amount you will pay on the loan after 4 years using the provided formula, we can identify the variables:

- \( PV = 5,050 \) (the present value or the principal of the loan)
- \( r = 4.98/100 = 0.0498 \) (the interest rate in decimal form)
- \( t = 4 \) (the time in years)

Now, we can use the formula:

\[
FV = PV(1 + rt)
\]

Substituting in the values:

\[
FV = 5,050(1 + (0.0498 \times 4))
\]

First, calculate \( rt \):

\[
rt = 0.0498 \times 4 = 0.1992
\]

Now substitute \( rt \) back into the formula:

\[
FV = 5,050(1 + 0.1992)
\]

Calculate \( 1 + 0.1992 \):

\[
1 + 0.1992 = 1.1992
\]

Now, substitute this value back into the equation:

\[
FV = 5,050 \times 1.1992
\]

Now calculate that:

\[
FV = 6,055.76
\]

Thus, the total amount you will pay on the loan after 4 years is:

\[
\boxed{6055.76}
\]