Final answer:
The total interest paid on a $20,500 loan at 6.6% annual simple interest rate is $16,236 over the life of the loan. The yearly interest paid is calculated as 6.6% of $20,500, which is $1,353 per year, assuming that the loan's term is long enough to allow for full payment of total interest through equal yearly payments.
Step-by-step explanation:
The student is seeking to know how much interest would be paid each year on a loan with an annual simple interest rate. To find the annual interest payment from the loan, we first determine the total interest paid over the life of the loan. The total cost to repay the loan is $36,736, and the original loan amount is $20,500. The total interest paid is the total repayment amount minus the original loan amount, which is $36,736 - $20,500 = $16,236.
Now, since this is simple interest, interest paid each year is the same. The annual interest rate is 6.6%, we can calculate the yearly interest by taking 6.6% of $20,500 which is $20,500 * 0.066 = $1,353.
This calculation assumes that no part of the principal has been paid off during the year. If the loan term is less than or equal to the total interest divided by the yearly interest, then this yearly interest amount stands correct.