Question

Angie borrowed $1,485 to purchase a new laptop for the veterinarian’s assistant. The interest on the loan was 7.75%. How much interest will Angie pay if the loan is for 2 years???

Answer 1

This problem has several steps.

First, calculate the interest value for the first year by multiplication of the interest rate and the total amount of the initial loan. So: (1,485)X(0.0775) = $115.0875. This is the total amount of interest for the first year. We add this to the initial loan value to find the total amount for the first year: 115.0875+1,485=$1,600.0875. The next year, she will be charged on this amount, instead of $1,485. So, you repeat the first step with this new value. (1,600.0875)x(0.0775)=$124.0067813. This is the total amount of interest charged the second year. You add this to her total from last year: 124.0067813+1,600.0875 =$ 1,724.094281. This is the total she would have to pay back on her initial loan after to years. (Rounded to whatever decimal place specified. Probably $1,724.09)