Question

N amount of $15,000 is borrowed for 10 years at 8.75% interest, compounded annually. if the loan is paid in full at the end of that period, how much must be paid back?

Answer 1

We should determine amount of interest per year.
Multiply the percentage to the former loan.
interest per year = 8.75% × 15,000
interest per year = 0.0875 × 15,000
interest per year = 1,312.5
Amount of interest each year is $1,312.5

Estimate interest for 10 years
interest 10 years = interest per year × 10
interest 10 years = 1,312.5 × 10
interest 10 years = 13,125
Amount of interest for 10 years is $13,125

Calculate how much he pay
total = the loan + the interest
total = 15,000 + 13,125
total = 28,125
The total he must pay is $28,125