Jason borrowed 24799 at a rate of 125 simple interest to pay

Jason borrowed $24,799 at a rate of 12.5% simple interest to pay for a new car. If he paid off the loan in 5 years, how much interest did Jason pay? How much did Jason pay altogether for the car? Round your answers to the nearest cent if necessary and include units with both.

The formula for simple interest is I = PRT, where I = interest, P = principal (in this case the amount borrowed), r = rate of interest in decimal form, and t = time in years.

Solution

Here,

Principal amount, P = $24,799

Rate of interest, R = 12.5%

Time, T = 5 years

By applying the formula for simple interest, I = PRT

We get,

I = (24,799x12.5x5)/100 [ we divide by 100 because the rate is in percentage which is /100]

= 15499.375

Therefore, Jason has to pay a total interest of $15499.375 which is approximately $15,500.

Then, the total amount Jason paid for the car will be (amount borrowed + the interest amount) = (24,799+15,500) = 40,299 which is approximately $40,300.