Question

A bank loans a customer $87,000 for a period of 15 years. The simple interest rate of the loan is 9.2%. What is the total amount that the customer will need to pay the bank over the 15 years? F.$1,305,000 G. $12,093,000 H.$207,060 J. $120,060

Answer 1

The total amount that the customer needs to pay over the 15 years term will be H. $207,060.

Explanation:

Simple interest: A = P(1 + rt)

where A is the final amount,

P is the principal,

r is the rate, and

t is the time in years

Given:

P = $87,000

t = 15 years

r = 9.2% or 9.2%/100% = 0.092

Asked: the total amount after the term A

Solve:

A = P(1+rt)

A = $87,000(1 + (0.092)(15))

A = $87,000 (1 + 1.38)

A = $87,000 (2.38)

A = $207,060