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Leona Jefferson purchased a home and obtained a 20-year loan of $436,500 at an annual interest rate of 8.5%. Find the amount of interest paid on the loan over the 20 years. (Round your answer to the nearest cent.)

User Ethan Post
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Final answer:

The total amount of interest paid on Leona Jefferson's 20-year home loan of $436,500 at an annual interest rate of 8.5% would be $742,050.00.

Step-by-step explanation:

The question involves calculating the total amount of interest paid over the life of a home loan given the principal, interest rate, and term of the loan. To do this, we must ascertain the amount of interest paid each year and then sum it over the 20-year term of the loan.

Leona Jefferson's loan amount is $436,500 at an annual interest rate of 8.5%.

To calculate the annual interest paid, we use the formula:
Interest per year = Principal × Interest rate
Interest per year = $436,500 × 0.085
Interest per year = $37,102.50
We then multiply the annual interest by the number of years to get the total interest paid over the 20-year period

Total interest = Interest per year × Number of years
Total interest = $37,102.50 × 20 years
Total interest = $742,050.00

The amount of interest Leona will pay over the 20 years is $742,050.00, rounded to the nearest cent.

User Opstalj
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