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Sania took a loan of $16000 against her insurance policy at the rate of 12.5% per annum. Calculate the amount that Sania has to pay.

User Ecnalyr
by
8.0k points

1 Answer

2 votes

Final Answer:

Sania has to pay $18,000, which includes the principal amount of $16,000 and the interest accrued at the rate of 12.5% per annum.

Step-by-step explanation:

The total amount Sania has to repay comprises the principal and the interest accrued over the loan period. The formula for calculating the total amount payable on a loan is given by:

Total Amount

=

Principal

+

Principal

×

(

Rate of Interest

100

)

×

Time

Total Amount=Principal+Principal×(

100

Rate of Interest

)×Time

In this case, Sania took a loan of $16,000 at an annual interest rate of 12.5%. If we assume the loan period is for one year, we can substitute these values into the formula:

\text{Total Amount} = $16,000 + $16,000 \times \left(\dfrac{12.5}{100}\right) \times 1

Calculating this gives us the total amount Sania has to repay, which is $18,000.

Understanding the total repayment amount is essential for borrowers to plan their finances effectively. Sania's repayment includes not only the borrowed principal of $16,000 but also the interest amount, which is $2,000 in this case. This clarity helps individuals manage their financial commitments and ensures transparency in loan transactions.

User Hamed Nazaktabar
by
8.2k points
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