Question

Mrs. Siebenaller bought a bus for 25,000 with a 7% interest rate mrs s gets a loan payoff of 60 months how much interest would she pay

Answer 1

Answer:

$\ 4701.80$

Step-by-step explanation:

Mrs. Siebenaller bought a bus for 25,000 with a 7% interest rate and she gets a loan payoff of 60 months,

We know that,

$\text{PV of annuity}=P\left[\dfrac{1-(1+r)^{-n}}{r}\right]$

Where,

PV = Present value of annuity = 25000,

r = rate of interest of each period = $\dfrac{7}{12}$% monthly

n = number of periods = 60 months,

Putting the values,

$\Rightarrow 25000=P\left[\dfrac{1-(1+\frac{0.07}{12})^{-60}}{\frac{0.07}{12}}\right]$

$\Rightarrow P=\dfrac{25000}{\left[\dfrac{1-(1+\frac{0.07}{12})^{-60}}{\frac{0.07}{12}}\right]}$

$\Rightarrow P=\ 495.03$

Hence total amount paid is,

$=495.03\times 60=\ 29,701.80$

Therefore interest amount is,

$=29,701.80-25,000=\ 4701.80$