Juan bought a pickup truck for $16,000. He paid $1,000 down and borrowed the rest on a one year note at 16% interest. How much will he owe at the end of one year?

Question

theeric · Answer

I might be able to help, but the money talk is what I'm unsure of.

Juan starts owing $16,000 but then he pays $1,000. Now he owes $16,000 - $1,000 = $15,000. I guess the note means he promises to pay that in a year. So, at the end of the year, he'll need to pay $15,000 plus 16% of $15,000 (because that's how interest works. $15,000 + 16% * $15,000  =  $15,000 + .16 * $15,000.
That is $15,000 + $2,400 = $17,400.

So Juan will have to pay $17,400 at the end of the year.