Josiah takes out a loan with a 4% interest rate to buy a new car for $21,500. How much will he pay in interest if the loan must be paid back in 5 years.

Answer 1

First, we need to calculate the total amount that Josiah will pay back over 5 years.

Total amount = Principal + Interest
Total amount = $21,500 + Interest

Next, we need to calculate the interest for each year.

Interest for 1 year = Principal x Interest rate
Interest for 1 year = $21,500 x 4% = $860

Total interest for 5 years = Interest for 1 year x 5
Total interest for 5 years = $860 x 5 = $4,300

Therefore, Josiah will pay $4,300 in interest over the course of 5 years.