Exploring Simple Interest Concepts

Billy wants to buy his first car but lacks the funds. Mr. Bank offers two options: save money or take a loan. Billy opts for a loan, understanding he will pay interest. The bank loans him $188,000 at 10% interest per year. Over 5 years, Billy will pay $9,000 in interest. He buys the car and plans to repay the loan, making everyone involved satisfied.

What was Billy's initial reaction upon finding the price of the car?

• He was excited and ready to buy.

• He realized he didn't have enough money.

• He negotiated the price with the salesperson.

• He decided to look for another car.

What was Billy's initial contribution towards buying the car?

• $2,000

• $4,000

• $1,000

• $3,000

What are the two options Mr. Bank offers Billy for acquiring the car?

• Leasing the car or buying it outright

• Trading in an old car or paying in full

• Borrowing money or saving up over time

• Winning the car in a contest or buying it

How much money did Billy need to borrow from the bank?

• $16,000

• $18,000

• $20,000

• $22,000

What is the interest rate Mr. Bank offers for the loan?

• 5% per year

• 10% per year

• 20% per year

• 15% per year

How much total interest will Billy pay if he takes five years to repay the loan?

• $9,000

• $7,500

• $6,000

• $4,500

What does the interest on a loan represent?

• A refundable deposit

• A government tax

• A fee for borrowing money

• A discount on the loan

Who benefits from the interest paid on a loan?

• The borrower

• The car dealership

• The government

• The bank

What was Billy's total cost for the car including the interest?

• $28,000

• $27,000

• $30,000

• $29,000

What does Billy need to do after purchasing the car?

• Sell the car for a profit

• Save money for another car

• Thank Mr. Bank for the loan

• Repay the loan and interest