Question

If Ben borrowed $20,000 for his business of a 10-year loan at 6.25%.

a. What is the monthly payment of a Ben’s loan?
b. What will be the total of Ben’s monthly payments for the 10 years?
c. How much total interest did Ben pay for the loan?

Answer 1

a. $104.17 monthly interest.

b. 120 monthly payments.

c. Total interest of $12,500.

Explanation:

a.

I = Prt

I = (20000 x 0.0625 x 1) = 1250 annually

for monthly Interest payment divide the answer by 12;

1250/12 = $104.17 monthly

b.

12 x 10 = 120 monthly payments

c.

I = Prt

I = $20,000 x 0.0625 x 10

I = $12,500