Question

Suppose that Marlie had decided to apply for a private loan rather than a federal loan. She has

Answer 1

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 t years in simple interest is modeled by:

$A(t) = A(0)(1 + rt)$

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 $A(0) = 5000$.

• The APR is of 7.8%, hence $r = 0.078$

• 10 years, hence $n = 10$

Item b:

$A(10) = 5000[1 + 0.078(10)] = 8900$

She will pay back $8,900.

Item a:

$8,900 will be paid in 10 x 12 = 120 months, hence:

$M = \frac{8900}{120} = 74.17$

Her monthly payment is of $74.17.

Item c:

Loan of $5,000, pays back $8,900, hence:

8900 - 5000 = 3,900

The total interest amount is of $3,900.

A similar problem is given at brainly.com/question/13176347