You borrow $12,000 to buy a car. You are charged 9% interest. Your payments are $300 a month. How much do you owe at the end of a year? Interest can be found with the formula I=Pr where I is the interest you pay, P is the principal or money you owe, r is the interest rate, and t is the time. Interest rates are usually given as a percent that is charged per year. 1. Find the interest charged on a $12,000 loan at 9% for 1 year. \$[080 2. Add the interest to the $12,000 and then subtract your payments for one year. Using this method, how much would you owe at the end of a year? Because this method is easy to understand, many loan companies use it to compute a loan balance. However, this method charges the borrower interest on the whole $12,000 for the year, even after some of the loan is paid off. The table shows a more appropriate way to compute a loan balance. The interest is computed each month on the "declining balance." In the interest formula, t=121 of a year. 3. Camnlete the table. The first two months are done for you. 4. How much more do you owe at the end of one year with the straight method than with the declining balance method