Christy needs $25,000 to purchase a new car. she borrows this amount at an interest rate of 8% for 5 years. what is the amount o

Question

Brums [2.3K]

3 years ago

7

Christy needs $25,000 to purchase a new car. she borrows this amount at an interest rate of 8% for 5 years. what is the amount o

f interest that will be paid?

Business

1 answer:

gulaghasi [49] · Answer 1 · 2022-06-11T08:17:47+03:00

Principle is the amount borrowed or invested in or from a bank or a financial institution. In this case the principle is $ 25,000, interest rate is 8% and the interest period is 5 years.
Thus amount to be paid after a period of 5 years will be 25,000 ( 1 +0.08)∧5
= 25,000 (1.08)∧5
=25,000 × 1.4693
=$36,733.20
To calculate the interest we subtract the principle sum from the Amount to be paid.
= $36733.20- $25000=11733.20
Therefore, interest =$ 11733.20