Question

Angel's bank gave her a 4 year add on interest loan for $7,640 to pay for new equipment for her antiques restoration business. The annual interest rate is 5.27% How much interest will she pay on the loan? $_______How much would her monthly payments be? $________(round to nearest cent)

Answer 1

From the information given,

Principal = 7640

Number of years = 4

Recall, 1 year = 12 months

4 years = 4 * 12 = 48 months

rate = 5.27/100 = 0.0527

The amount of the principal to be paid each month = 7640/48 = 159.17

Amount of interest owed each month = (7640 * 0.0527)/12 = 33.55

Amount required to be paid by the borrower each month = 159.17 + 33.55 = 192.72

Total interest to be paid on the loan = 7640 * 0.0527 * 4 = 1610.51

The first answer is $1610.51

The second answer is $33.55