Question

If you borrow $2,300 for 9 years at an annual interest rate of 6%, what is the total amount of money you will pay back?

Answer 1

To calculate the total amount of money you will pay back on a loan with simple interest, you can use the formula:

\[
A = P(1 + rt)
\]

where:
- \( A \) is the total amount paid back,
- \( P \) is the principal amount (the initial amount borrowed),
- \( r \) is the annual interest rate (in decimal form), and
- \( t \) is the time (in years).

In your case:
- \( P = 2300 \),
- \( r = 0.06 \) (since 6% expressed as a decimal is 0.06),
- \( t = 9 \).

Now, substituting the values into the formula:

\[
A = 2300(1 + (0.06 \times 9))
\]

Calculating \( 0.06 \times 9 \):

\[
0.06 \times 9 = 0.54
\]

Now, add 1 to that result:

\[
1 + 0.54 = 1.54
\]

Now, multiply by the principal:

\[
A = 2300 \times 1.54 = 3542
\]

Thus, the total amount of money you will pay back after 9 years is **$3,542**.