loan from the bank to purchase a car. If he borrowed \( \$ 17,240 \) at a simple interest rate of \( 8.25 \% \), how much total will he have paid after 5 years?

To calculate the total amount paid after 5 years with simple interest, you can use the formula: \[ \text{Total Amount} = P + (P \times r \times t) \] where: - \( P \) is the principal amount (the initial loan, \( \$ 17,240 \)), - \( r \) is the interest rate (8.25%, or 0.0825 as a decimal), - \( t \) is the time in years (5 years). Now, calculate the interest: \[ \text{Interest} = 17,240 \times 0.0825 \times 5 = 7,098.00 \] Now, add the interest to the principal: \[ \text{Total Amount} = 17,240 + 7,098 = 24,338 \] So, after 5 years, he will have paid a total of \( \$ 24,338 \). If you're planning to take out a loan, it's essential to understand how interest compounds or accrues depending on the type of loan. Many people mistakenly treat all loans as simple interest, but depending on the lender and terms, calculating the actual cost might require understanding different interest structures, such as compound interest or amortization schedules. Also, it’s worth noting that financing a car through a loan typically includes additional costs like insurance, maintenance, and potentially loan fees. Exploring alternatives, such as buying a used car or leasing, can save you money in the long run!