Question

David borrowed $2,500 from his local bank. The yearly interest rate is 8%. If David pays the full principle and interest in the first year of the loan, how much money will he pay to the bank?

Answer 1

Answer: David would be paying 200.00 per year

Step-by-step explanation:

All you really have to do is just multiply 2,500 to .08 then once when you get your answer then you shift your decimal 2 places to the left.

Answer 2

Answer:

$2700.

Step-by-step explanation:

We have been given that David borrowed $2,500 from his local bank. The yearly interest rate is 8%.

To find the total money paid by David to bank, we will use simple interest formula.

$A=P(1+rt)$, where,

A = Amount after t years,

P = Principal amount,

r = Annual interest rate in decimal form,

t = Time in years.

Let us convert our given rate in decimal as:

$8\%=\frac{8}{100}=0.08$

$A=\ 2500(1+0.08*1)$

$A=\ 2500(1+0.08)$

$A=\ 2500(1.08)$

$A=\ 2700$

Therefore, David will pay $2700 to the bank.