Phyllis went to the mall and saw a massage chair that she would have to take a loan out for $6500 to purchase. The bank said that she could get a simple interest rate of 5% for 5 years. What is the total amount that Phyllis will pay for the chair?
Question
Phyllis went to the mall and saw a massage chair that she would have to take a loan out for $6500 to purchase. The bank said that she could get a simple interest rate of 5% for 5 years. What is the total amount that Phyllis will pay for the chair?
Solution
To calculate the total amount that Phyllis will pay for the chair, we need to first calculate the interest she will pay on the loan.
Step 1: Convert the interest rate from a percentage to a decimal. 5% becomes 0.05.
Step 2: Calculate the interest. The formula for simple interest is I = PRT, where P is the principal amount (the amount of the loan), R is the rate of interest per period, and T is the time the money is borrowed for.
So, I = 1625.
Step 3: Add the interest to the principal amount to get the total amount Phyllis will pay for the chair.
So, 1625 = $8125.
Therefore, Phyllis will pay a total of $8125 for the chair.
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