Question

lashonda wants to buy a new car but needs money for the down payment. her parents agree to lend her $2000 for 3 years. she makes no payments except the one at the end of that time. answer the following questions. if necessary, refer to the list of financial formulas. (a) how much total interest will lashonda have to pay? $ (b) what will the total repayment amount be (including interest)? $

Explanation:

Part (a)

Step1: Recall simple interest formula

The formula for simple interest is \( I = P \times r \times t \), where \( P \) is the principal amount, \( r \) is the annual interest rate (in decimal), and \( t \) is the time in years.
Here, \( P = 2000 \), \( r = 6\% = 0.06 \), and \( t = 3 \).

Step2: Substitute values into formula

Substitute \( P = 2000 \), \( r = 0.06 \), and \( t = 3 \) into the formula:
\( I = 2000 \times 0.06 \times 3 \)

Step3: Calculate the interest

First, calculate \( 2000 \times 0.06 = 120 \). Then, \( 120 \times 3 = 360 \).

Step1: Recall total repayment formula

The total repayment amount \( A \) (including interest) is the sum of the principal \( P \) and the interest \( I \), so \( A = P + I \).

Step2: Substitute values

We know \( P = 2000 \) and from part (a), \( I = 360 \). So, \( A = 2000 + 360 \).

Step3: Calculate the total repayment

\( 2000 + 360 = 2360 \).

Answer:

The total interest Lashonda has to pay is \$360.

Part (b)