To calculate how much Jonathan will need to pay when he finishes college in four years for a loan with simple interest, we can use the formula for compound interest:
\[ A = P(1 + r)^n \]
Where:
- \( A \) is the amount of money accumulated after n years, including interest.
- \( P \) is the principal amount (the initial amount, which is $25,000).
- \( r \) is the annual interest rate (decimal) (5% = 0.05).
- \( n \) is the number of years the money is invested or borrowed (in this case, 4 years).
Plugging in the values:
\[ A = 25000 \times (1 + 0.05)^4 \]
Calculating \( (1 + 0.05)^4 \):
\[ (1.05)^4 \approx 1.21550625 \]
Now, plug this back into the formula:
\[ A \approx 25000 \times 1.21550625 \approx 30387.66 \]
Therefore, the total amount Jonathan would need to pay when he finishes college in four years is approximately $30,387.66.