On January 1, year 2, Connor Corporation signed a $100,000 noninterest-bearing note due in three years at a discount rate of 10%
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This is a simple interest problem. We are going to use the formula:
Where I is the interest she has to pay for her loan, P is the amount she financed, r is the interest rate (in decimal), and t is the number of years.
Replace the values to get:
Now that we have the interest she paid, we just need to add them to the value she paid to get the total cost she paid:
We can conclude that the total cost of the car that she financed will be $21,077.46
Where I is the interest she has to pay for her loan, P is the amount she financed, r is the interest rate (in decimal), and t is the number of years.
Replace the values to get:
Now that we have the interest she paid, we just need to add them to the value she paid to get the total cost she paid:
We can conclude that the total cost of the car that she financed will be $21,077.46