Answer:
Explanation:
Principal borrowed =$20,000
Loan year=5years
Monthly interest =12%
We need to find the amount after 12years
Compound interest is give as
Using compound interest formula
A=P(1+r/n)^nt
Where,
P = principal amount = $20,000
r = annual rate of interest =12%=0.12
t = number of years the amount invested =5years
A = amount of money accumulated after n years, including interest.
n = number of times the interest is compounded per year=12months
Therefore,
A=P(1+r/n)^nt
A=20,000(1+0.12/12)^5×12
A=20,000(1+0.01)^60
A=20,000(1.01)^60
A=20,000×1.817
A=$36,333.9
So he is meant to pay $36,333.9 for 5years (60months)
Then he will pay
$36,333.9/60
He will pay $605.57 per month
So his twelfth payment is 605.47×12=$7266.78
Using is normal payment
He is suppose to pay $20,000 at a rate of $20,000/60=333.33
Then after the twelve payment, then he his supposed to pay $333.33×12=$4000
So the interest between on the twelfth payment is 7266.78-4000 =$3266.9
