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William gets a student loan to pay for his college tuition. He borrowed $2,500 for 10 years at an interest rate of

8%. How much will William pay in interest on this loan?

User Daveloyall
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2 Answers

14 votes
Answer:


2897.31

Step-by-step explanation:
User Kubi
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4.2k points
12 votes

Answer:

2897.31

Step-by-step explanation:

I'm going to assume two things

The interest rate is compoudning annually

There is only one payment (at the end of the 10 years)

To find the amount of interest paid on this loan we first need to calculate the future value (or accumulated value)

FV=PV(1+i)^n

Plug in our numbers

2500(1+.08)^10

Run this through a calcuatlor and get 5,397.31

This is the future value and the question is asking for the interest paid which is just the FV-PV

Which means we have

5,397.31-2500

our answer is 2897.31

User Alex Klimenkov
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