Answer: the total lifetime cost for the loan is $11616.4
Step-by-step explanation:
We would apply the formula for determining compound interest which is expressed as
A = P(1+r/n)^nt
Where
A = total cost of the loan at the end of t years.
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount borrowed.
From the information given,
P = $5,500
r = 7.5% = 7.5/100 = 0.075
n = 12 because it was compounded 12 times in a year.
t = 10 years
Therefore,
A = 5500(1 + 0.075/12)^12 × 10
A = 5500(1 + 0.00625)^120
A = 5500(1.00625)^120
A = $11616.4
