Part A) To calculate the interest earned, we can use the formula:
Interest = Principal x Rate x Time
In this case, the Principal is $12,750, the Rate is 5.5% (or 0.055 as a decimal), and the Time is 4.75 years.
Interest = $12,750 x 0.055 x 4.75
Interest = $12,750 x 0.26125
Interest = $3,328.44
Therefore, Riley will earn $3,328.44 in interest.
Part B) To find out how much money Riley's friend will have paid back in total, we need to add the initial loan amount to the interest earned.
Total Amount Paid Back = Principal + Interest
Total Amount Paid Back = $12,750 + $3,328.44
Total Amount Paid Back = $16,078.44
Therefore, when Riley's friend pays him back, he will have gotten paid back a total of $16,078.44.
Riley let his friend borrow $12,750. He wants to be paid back in 4.75 years and is going to charge his friend a 5.5% interest rate.
Part A) How much money in interest will Riley earn?
Part B) When Riley's friend pays him back, how much money will he have gotten paid back in all?
1 answer