Question

Izzy gets a loan of $2,800 with an APR of 3.5% . She will repay the loan in monthly payments for 9 months. To find the total amount of interest she will pay, Izzy uses an online calculator. What are the correct numbers she should enter?

Answer 1

First, change percent into decimal value
Percent means per hundred
APR = 3.5%
APR = 3.5/100
APR = 0.035
The APR is 0.035 of the total loan

Second, we need to find interest rate for 9 months
interest rate = 9/12 × 0.035
interest rate = 3/4 × 0.035
interest rate = 0.75 × 0.035

Third, determine what to put into calculator
She can put it like this
interest = interest rate × total loan
interest = 0.75 × 0.035 × 2,800

Or she can put it like this
interest = 0.02625 × 2,800