Question

James is taking out a personal loan from his local bank. if the total loan amount is $2500 at a simple interest rate of 14.99% and in the 1st 4 months he makes only interest payments, how much will he pay in those months total?

Answer 1

James has to pay an annual interest of 14.99% on $2500 loan.

In decimal:

14.99% = 14.99/100 = 0.1499

The interest of 1st year would be:

0.1499 * 2500 = 374.75 dollars

Monthly interest would be:

374.75/12 = $31.23

If he pays this amount each month for first 4 months, he would pay a total of:

$31.23 * 4 =

$124.92