Question

You need to buy a car to help you get to school and work. You take out a $8,000 loan with a 9.25% annual simple interest rate to be paid off over 66 months.

A) how much interest will you be charged?


B) what is the total amount to be paid?

Answer 1

A) Interest that will be charged = $4070

B) The total amount to be paid = $12070

Explanation:

Given:

Initial amount paid = $8,000

Rate of the interest = 9.25%

Time period = 66 months

A) AMOUNT OF INTEREST CHARGED

Let the interest charge be x

`\text{Simple interest,  x} =\frac{\text { principal amount } * \text {rate of interest } * \text { number of years }}{100}`

here we are given with number of months i.e., 66 months

converting 66 months into years

=>
`(66)/(12)`

=>5.5

so 66 months = 5.5 years

Now substituting the vales in the formula we get,

simple interest, x =
`\frac { 8000* 9.25 *5.5}{100}`

simple interest, x =
`\frac {74000 *5.5}{100}`

simple interest, x =
`\frac {407000}{100}`

simple interest, x = 4070

B) TOTAL AMOUNT TO BE PAID:

Let the total amount paid after 66 months be Y

Then ,

Y = Principal amount + interest for 66 months

Y = 8000+ 4070

Y =12070