Question

A $5000 loan was to be repaid with 8% simple annual interest. A total of $5350 was paid. How long was the loan outstanding?

Answer 1

1.       Loan = 5000 dollars
Every years = 8% interest
Paid a total of 5350 dollar
Find the term of the loan
=> 8% = 8/100
=> .08
=> 5000 x .08 = 400, but he only paid 350 as interest that means the term is less than 1 year
=> In a year, there are 12 months, so that’s equals
=> 12 months / 8% interest
=> 1.5, every month his loan is increasing 1.5%
=> 5000 x 0.07 = 350
=> 7 percent x 1.5 percent = 10.5
Thus, he paid 5350 dollars for his 10 months loan