Shakira buys a second-hand car for $5000. She pays a $2000 cash deposit and borrows the balance from her parents. She agrees to pay her parents $100 each month for 3 years.

a. Calculate the total amount Shakira pays to her parents.

b. How much interest does she pay?

c. Find the annual flat rate of interest charged by Shakira’s parents.

a. Repayments = 100 × 36

= $3600

b. Total paid for the car = 2000 + 3600

= $5600

Interest = $5600 – $5000 = $600

c. Interest rate = ^{interest}/_{loan} × 100

= ^{600}/_{3000} × 100 = 20%

20% for 3 years

20 ÷ 3 = 6^{2}/_{3}% pa