If the car initially costs $25,000 how many years is the loan for if the final price is $27,500?

Question

Jenny decided to take out a loan on a car with an interest rate for 5%. If the car initially costs $25,000 how many years is the loan for if the final price is $27,500? The interest is only calculated at the end of each year.

Answer 1

Hi Amari,

If your question is asking after how long a $25,000 loan will become $27,500, let's set up our interest equation:

25000 * 1.05^t = 27500

This equation is saying that we start with a value of 25000, and every year it increases by 5%. Solving for t will give us how many years it takes to reach 27500.

Solving this equation, you get t = 1.9535 years. However, if interest is calculated only at the end of each year, it will take 2 years for the value to surpass 27500.