Question

Tyler took out a five-year loan with a principal of $12,000. He made monthly payments of $215 for the entire period, at which point the loan was paid off. How much did Tyler pay in interest?

Responses

$15

$60

$75

$900

Answer 1

D, $900

Explanation:

and monthly payments of $215, we can use the following formula:

Total interest = Total amount paid - Principal

where:

Total amount paid = Monthly payment x Number of payments

Number of payments = Number of years x 12

In this case, Tyler made monthly payments of $215 for 5 years, which is a total of 5 x 12 = 60 payments.

Substituting these values into the formula, we get:

Total amount paid = $215 x 60 = $12,900

Total interest = $12,900 - $12,000 = $900

Therefore, Tyler paid $900 in interest over the five-year period. The answer is option D: $900.