Final answer:
The amount of interest paid on the demand loan is -$3,170.34.
Step-by-step explanation:
To calculate the amount of interest paid on a demand loan with compound interest, we can use the formula:
Interest = P(1 + r/n)^(nt) - P
Where:
- P is the principal amount
- r is the annual interest rate (expressed as a decimal)
- n is the number of times interest is compounded per year
- t is the number of years
For this specific loan, the principal amount is $11,704.26, the interest rate is 7.7% (or 0.077 as a decimal), compounded annually, and the loan duration is 8 years and 4 months (or 8.33 years).
Using the formula and plugging in the values:
Interest = $11,704.26(1 + 0.077/1)^(1 * 8.33) - $11,704.26
Simplifying the equation:
Interest ≈ $11,704.26(1.077)^(8.33) - $11,704.26
Interest ≈ $8,533.92 - $11,704.26
Interest ≈ -$3,170.34
Therefore, the amount of interest paid on this loan is -$3,170.34.