Mark borrowed $4,000 for 5 years at a rate of 4.5%. how much money does...

If he was charged interest for every year, then it's $900 interest. But if he was charged interest on the whole loan, then it's $180.

You work that out by doing 0.045 x 4000 = 180

This works because 1 x 4000 = 4000. Consider the number one to mean 100 percent. So... 100 percent of 4000 is 4000. That would mean, 4.5 percent of 4000 is 180.
 
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