A farmer borrowed $28,500 from the bank to build a new barn. The bank charges 4.5% annual simple interest and allowed the farmer
to repay the loan in 42 monthly payments.
A. How much money was paid in interest?
B. How much was each monthly payment?
1 answer:
Answer:
A) i = $4488.75
B) Amount paid per month = $785.45
Step-by-step explanation:
A) Formula for simple interest is;
i = PRT
We are given;
Principal; P = $28500
Rate; R = 4.5% = 0.045
Time; T = 42 months = 42/12 years
Thus;
i = (28500 × 0.045 × (42/12))
i = $4488.75
B) Since interest was $4488.75 and principal is $28500,then total he paid after 42 months is;
Total = 28500 + 4488.75
Total = $32988.75
Amount paid per month = 32988.75/42 = $785.45
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