Question

James takes out a loan of 9000 euros which keeps on charging simple interest at a rate of 3% of the original amount per annum until it is cleared. James pays of 770 euros each year to reduce the loan. After how many years will James have fully cleared the loan?

Answer 1

It will take James approximately 12 years to fully clear the loan.

Step-by-step explanation:

To calculate the number of years it will take James to fully clear the loan, we need to determine how many times he needs to make payments.

Each payment reduces the loan by €770. Since James took out a loan of €9000, the total number of payments he will need to make is:

• Number of payments = Original loan amount / Payment amount
• Number of payments = €9000 / €770
• Number of payments ≈ 11.6883

Since James cannot make a fraction of a payment, we need to round up the number of payments to the nearest whole number. Therefore, James will need to make 12 payments to fully clear the loan. Thus, it will take him approximately 12 years to clear the loan.