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Maya wants to buy a new house but needs money for the down payment. Her parents agree to lend her money at an annual rate of 4%, charged as simpinterest. They lend her $7000 for 4 years. She makes no payments except the one at the end of that time.Answer the following questions. If necessary, refer to the list of financial formulas.(a) How much total interest will Maya have to pay?$0(b) What will the total repayment amount be (including interest)?I need help with this math problem.



Answer :

Answer:

• Interest = $1,120

,

• Total repayment amount = $8,120.

Explanation:

From the statement of the problem, the following information is given:

• Loan Amount (Principal) = $7,000

,

• Annual Interest Rate = 4% (charged at Simple Interest)

,

• Time = 4 years

Part A

First, we determine the interest Maya will have to pay using the simple interest formula:

[tex]\begin{gathered} $Simple\: Interest=\frac{Principal\times Rate\times Time}{100}$ \\ =\frac{7000\times4\times4}{100} \\ =70\times16 \\ =\$1120 \end{gathered}[/tex]

Maya will have to pay an interest of $1,120.

Part B

Next, determine the total repayment amount (including interest).

[tex]\begin{gathered} \text{ Repayment Amount}=\text{ Loan}+\text{ Interest} \\ =7000+1120 \\ =\$8,120 \end{gathered}[/tex]

The total repayment amount is $8,120.

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