Question

3. You purchase a car using a $20,000 loan with a 5% simple interest rate.

Answer 1

A) A = 20,000 [Principle] * (0.05 [Interest] * 4 [Number of years]) = $4,000 interest

b) A = 20,000 [Principle] * (0.05 [Interest] * 2 [Number of years]) = $2,000 interest