Question

Alicia is borrowing $15,000 with a 6% annual percentage rate over 60 months. What is Alicia's monthly payment for 60 months?

a) $275
b) $325
c) $2750
d) $3250

What is the total amount Alicia pays back to the lender over 60 months?
a) $15,000
b) $18,500
c) $19,500
d) $20,000

How much did Alicia pay in interest over the 60 months?
a) $0
b) $3,000
c) $4,500
d) $5,000

Answer 1

Alicia's monthly payment for 60 months is $325. Alicia pays back a total of $19,500. Alicia pays $4,500 in interest over the 60 months.

Step-by-step explanation:

To calculate Alicia's monthly payment for 60 months, we can use the formula:

Monthly Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^-Number of Months)

Let's plug in the values:

Loan Amount = $15,000

Annual Percentage Rate = 6%

Monthly Interest Rate = 6% / 12 = 0.5%

Number of Months = 60

Substituting these values, we get:

Monthly Payment = (15000 * 0.005) / (1 - ((1 + 0.005)^-60)) = $325

Therefore, Alicia's monthly payment for 60 months is $325 (option b).

To calculate the total amount Alicia pays back to the lender over 60 months, we can simply multiply the monthly payment by the number of months:

Total Amount = Monthly Payment * Number of Months = $325 * 60 = $19,500

Therefore, Alicia pays back a total of $19,500 (option c).

To calculate the amount Alicia pays in interest over the 60 months, we can subtract the loan amount from the total amount she pays back:

Interest = Total Amount - Loan Amount = $19,500 - $15,000 = $4,500

Therefore, Alicia pays $4,500 in interest over the 60 months (option c).