Question

Renee takes out a loan of €6000 which keeps on charging simple interest at 3% of the original amount per annum until it is cleared. renee pays off €680 each year to reduce the loan. after how many years will renee have fully cleared the loan?

Answer 1

Renee will be able to fully clear her €6000 loan in 12 years by paying €680 annually, with a simple interest rate of 3% per year.

Step-by-step explanation:

When Renee takes out a loan of €6000 with a simple interest rate of 3% per annum, the annual interest amount is calculated as 3% of the original loan amount, which is €6000 * 0.03 = €180. Since Renee pays off €680 each year, the amount that goes towards the principal loan repayment is €680 - €180 (interest) = €500.

To calculate the number of years it will take for Renee to clear the loan, we divide the total loan amount by the annual repayment towards the principal: €6000 / €500 = 12 years. Therefore, it will take Renee 12 years to fully repay the loan.