Hello,
Here's the problem : Sally buys a living room set ( sofa, chair and coffee table ) for $3380 including taxes sales. The store offers her a buy now pay later deal. If she does not pay by the end of three years she will be charges a simple interest at an annual rate of 4%
1. How much interest rate would she have to pay at the end of the 3 years ?
I dont quite understand the question, but I found : 12% because 4% x 3 years : 12% of interest
2. How much would she have to pay in total for the set at the end of the 3 years
I found : P = 3380 x R : 4% so 0.04 x 3 years = 36 months
Results : $4867.2
Let me know guys !
Thank you :)
+130516 1).....Using I = Prt ..... the total interest paid at the end of 3 years = $3380 * .04 X 3 = $405.60
[She is being charged 12% interest [cumulatively ] on the purchase
2) The total amount paid = $ [3380 + 405.60] = $3785.60
You got the first part of your question about right, except the proper way of doing it mathematically would be like this:
1- Since they have agreed to charge her a simple interest rate of 4% per annum, then she will pay=$,3,380 X 4%=$135.20 per year. But, because it's for 3 year, we just multiply that amount by 3, and we get: $135.20 X 3=$405.60. So that the total amount she will pay them will be: $3,380 + $405.60=$3,785.60. And that's it.
2- Remember they told her that they would charge her 4% annual interest rate
In simple interest, which means NOT componded. So, your calculations in 2 are wrong. The total amount she will owe them is the one I calculated in (1) above. And that is all there is to it.
