Question

You decide to borrow money to pay for college at 22% interest per year, in 2023.

Answer 1

Answer: On  loan of $5000 at that rate, you would be owing $9400

Step-by-step explanation: The loan is being borrowed at an interest rate that is calculated yearly. This is a case of a simple interest. The same amount of interest is calculated and that will be payable per year. The amount borrowed is the principal, and in this instance is $5000. The amount of interest payable is calculated as 22 percent of the principal and is paid yearly. So if a loan (principal amount) of $5000 is borrowed for a period of 4 years (that is, 2023 to 2027), then the interest is calculated for four years.

Hence, the formula for a simple interest computation is given as follows;

Interest = P x R x T

Where P = 5000, Rate = 0.22 (22 percent), and T = 4 (time in years)

Interest = 5000 x 0.22 x 4

Interest = 20000 x 0.22

Interest = 4400

Therefore, from the calculations shown, a loan of $5000 at the rate of 22% borrowed from 2023 to 2027 would have an interest payable of $4,400.

Upon repayment of the loan, you would be owing a total of $9,400 (that is, amount borrowed plus interest owing)