Question

Arnold borrowed $7890 at 11.5 percent for five years. How much did Arnold pay in interest?

Answer 1

937.5 is what I got.

Answer 2

The total amount Arnold pay in interest is $ 2521.30

Explanation:

Given :Arnold borrowed $7890 at 11.5 percent for five years.

We have to find the amount Arnold pay in interest

Using formula for monthly payment ,

`Monthly\ payment = (rate * Principal)/(1-(1+rate)^(-time\ period))`

Given : Principal value = $7890

Rate of interest = 11.5% anually

So monthly interest rate is
`(11.5)/(1200)`

Time = 5 years

In months 5 years = 5 × 12 = 60 month

Substitute, above we have,

`Monthly\ payment=7890\cdot((11.5)/(1200))/(\left(1-\left(1+(11.5)/(1200)\right)^(-60)\right))`

Simplify, we get,

Monthly payment = $ 173.52

Total payment that Arnold pay = No. of months × Monthly Payment

⇒ Total Payment = 60 × 173.52

⇒ Total Payment = $ 10411.30

Since, Money Arnold borrowed = $7890

Thus, Amount of interest = Total payment - Amount borrowed

⇒ Interest = 10411.30 - 7890

⇒ Interest = $2521.30

Thus, The total amount Arnold pay in interest is $ 2521.30