Question

You get a personal loan from the bank for $10,500, the interest rate you are charged is 8% for two years. What interest do you pay the bank?

Answer 1

The total interest paid on a $10,500 loan with an 8% interest rate for two years would be $1,680. This is calculated using the simple interest formula, where the principal amount, interest rate, and time are multiplied together.

Step-by-step explanation:

To calculate the interest paid on a loan, you can use the simple interest formula, which is Interest (I) = Principal (P) × Rate (R) × Time (T). In this case, the student has taken out a <$10,500 loan> with an interest rate of <8%> for . Using the formula:

• P = $10,500 (the principal amount borrowed)
• R = 8/100 (convert the percentage rate to a decimal by dividing by 100)
• T = 2 (the time in years)

Now, plug these values into the formula:

I = P × R × T

I = $10,500 × 0.08 × 2

I = $1,680

Therefore, the total interest paid on the loan after two years is $1,680.