Matthew wants to take out a loan to buy a car. He calculates that he can make repayments of $ 3 comma 500 per year. If he can get a five -year loan with an interest rate of 7.9 %, what is the maximum price he can pay for the car?

Answer: the maximum price (future amount) he could pay is

"$4,882.5"

Explanation:

The question above can be calculated using simple interest formula with amount;

A = p + prt

A = p (1 + rt)

From above question, variables given are:

principal 'p' = $3,500

time 't' = 5years

interest rate = 7.9% = 0.079

A = p (1 + rt)

A = 3500[1 + 0.079 (5) ]

A = 3500 [ 1 + 0.395]

A = 3500 (1.395)

A = $4,882.5

Approximated to $4,883 as a whole figure.

This is the maximum amount he could pay after 5 years.