Question

the simple interest formula is $a = p(1 + rt)$. griffin gets a car loan of $10,000 at an annual interest rate of 5% to be paid over 4 years. what is the total amount of interest he will pay by the end of the loan term? $5,000 $500 $2,000 $2,500

Explanation:

Step1: Recall simple interest formula

The simple interest formula is \( A = P(1 + rt) \), where \( A \) is the total amount, \( P \) is the principal, \( r \) is the annual interest rate (in decimal), and \( t \) is the time in years. To find the interest \( I \), we can use \( I = A - P \), or directly \( I = Prt \) (since \( A = P + I \), so \( I = P(1 + rt)-P = Prt \)).

Step2: Identify values

Given \( P = \$10,000 \), \( r = 5\% = 0.05 \) (converted to decimal), and \( t = 4 \) years.

Step3: Calculate interest

Using the formula \( I = Prt \), substitute the values:
\( I = 10000\times0.05\times4 \)
First, calculate \( 10000\times0.05 = 500 \).
Then, \( 500\times4 = 2000 \).

Answer:

\$2,000