Answer:
Interest Charged = $80
Total payback = $480
Step-by-step explanation:
According to the scenario, computation of the given data are as follows,
Present Value (PV) = $400
Time period (n) = 4 years
Interest rate (r) = 5%
So, we can calculate the future value(FV), by using following formula,
FV = PV ( 1 + n × r)
By putting the value, we get
FV = $400 ( 1 + 4 × 0.05)
= $480
Hence total amount she has to pay back = $480.
Interest charged = FV - PV
= $480 - $400
=$80
