Problem
1 answer:
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Using simple interest, and considering a loan of $5,000, it is found that:
a) Her monthly payment is of $74.17.
b) She will pay back $8,900.
c) The total interest amount is of $3,900.
The amount of money after <u>t years</u> in <em>simple interest</em> is modeled by:
In which:
- A(0) is the initial amount.
- r is the interest rate, as a decimal.
In this problem:
- The loan is of $5,000, hence
.
- The APR is of 7.8%, hence
- 10 years, hence
Item b:
She will pay back $8,900.
Item a:
$8,900 will be paid in 10 x 12 = 120 months, hence:
Her monthly payment is of $74.17.
Item c:
<u>Loan of $5,000, pays back $8,900</u>, hence:
8900 - 5000 = 3,900
The total interest amount is of $3,900.
A similar problem is given at brainly.com/question/13176347