Chapter 4.1, Problem 6R

To determine

To calculate:The total payment at the end of 24 months.

Explanation of Solution

Given the value of used car (P) = $10,000

The interest rate on loan (R) = 11%

Time period (T) = 24 months or 2 years.

Explanation:

  $\begin{array}{l}\text{Simple interest = P }\times \text{ R }\times \text{T}\\ \text{ = \$10,000 }\times \text{ 11\% }\times \text{2}\\ =\$2,200\\ \text{Total amount after 24 months = P + Simple interest}\\ \text{ = \$10,000 + \$2,200 }\\ \text{ =\$12,200}\end{array}$