Question

Assume that you take out a $7000 loan for 39 months at 6.5% apr. How much total interest will you have paid at the end of the 39 months?

Answer 1

The total interest paid on a $7000 loan at 6.5% APR over 39 months is $1478.75, calculated using the simple interest formula.

Step-by-step explanation:

To calculate the total interest paid on a $7000 loan for 39 months at a 6.5% APR, we use the simple interest formula, I = PRT, where I is the interest, P is the principal amount, R is the annual interest rate in decimal form, and T is the time in years.

First, convert the interest rate from a percentage to a decimal by dividing by 100:

R = 6.5 / 100 = 0.065.

Next, convert the loan period from months to years:

T = 39 months / 12 = 3.25 years.

Now, apply the values to the formula:

I = $7000 * 0.065 * 3.25.

I = $7000 * 0.21125.

I = $1478.75.

Thus, the total interest paid after 39 months is $1478.75.