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Igoryamba
3 years ago
14

John's Auto Repair just obtained an interest-only loan of $35,000 with annual payments for 10 years and an interest rate of 8 pe

rcent. What is the amount of the loan payment in Year 8?
Business
1 answer:
Nookie1986 [14]3 years ago
5 0

Answer:

$2,800

Explanation:

An interest only loan represents a type of loan offer where a borrower is only expected to pay the interest either for some of the term of the loan as agreed or for all of the terms of the loan. However, the principal amount that is collected remains constant all through the agreed interest -only period.

Since the loan obtained by John's Auto Repair is Interest Only, it means that the principal of $35,000 remains constant.

Hence, in the 8th year, John is expected to pay only the interest for the period =

0.08 x $35,000

= $2,800

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