You borrow $200. The simple interest rate is 12%. You pay off the loan after 2 years. How much doe you pay for the lone
beans
To calculate the total amount paid for the loan, we need to find the interest charged over the two-year period.
Step 1: Calculate the interest for each year
The interest for the first year can be calculated as follows:
Interest = Principal * Rate
= $200 * 12%
= $24
The interest for the second year will be the same since the interest is calculated annually.
Step 2: Calculate the total interest over the two-year period
Total interest = Interest for the first year + Interest for the second year
= $24 + $24
= $48
Step 3: Calculate the total amount paid for the loan
Total amount paid = Principal + Total interest
= $200 + $48
= $248
Therefore, you would pay a total of $248 for the loan.
To calculate the amount you would pay for a loan with simple interest, you can use the formula:
Total Amount = Principal + (Principal * Interest Rate * Time)
Given:
Principal (amount borrowed) = $200
Interest Rate = 12% = 0.12 (expressed as a decimal)
Time (in years) = 2
Substitute the given values into the formula:
Total Amount = $200 + ($200 * 0.12 * 2)
Now, let's calculate step by step:
1. Principal * Interest Rate * Time = $200 * 0.12 * 2 = $48
2. Total Amount = $200 + $48 = $248
Therefore, you would pay a total of $248 for the loan.
I = Prt = 200 * 0.12 * 2 = ___
add that to the starting principal to get the payoff amount