Stephen borrowed \(\$500\) from a bank and agreed to pay 6% annual interest on the loan for a term of 24 months. How much money will he have paid the bank at the end of the term of the loan?
Explanation
Use i = prt to find the interest. Put 500 in place of p. Put 0.06 in place of r (since 6% = 0.06). Put 2 in place of t (since 24 months = 2 years).
\(i=500 \times 0.06 \times 2\)
\(i=30 \times 2\)
\(i = 60\)
He must pay \(\$60\) in interest. So, in all, he must pay \(\$500 + \$60 = \$560\).