In order to buy a laptop, Denise borrowed $2,000 with simple interest of 4%. How much interest will she pay if she pays the entire loan off at the end of the third year?
Question
In order to buy a laptop, Denise borrowed $2,000 with simple interest of 4%. How much interest will she pay if she pays the entire loan off at the end of the third year?
Solution
To calculate the interest Denise will pay, we can use the formula for simple interest which is I = PRT, where:
- I is the interest
- P is the principal amount (the initial amount of money)
- R is the rate of interest per year
- T is the time the money is borrowed for in years
In this case, Denise borrowed $2000 (P), the interest rate is 4% or 0.04 (R), and she will pay off the loan at the end of the third year (T=3).
So, the interest Denise will pay is:
I = PRT I = 240
So, Denise will pay $240 in interest at the end of the third year.
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