Question

Susan asked her father for a no-interest loan of $8,500 so she could purchase a used car. She told her father that she would repay the loan at a rate of $250 per month. How much will be remaining on her loan after one year? When will she have paid off the loan?

Answer 1

After one year, Susan will have $5,500 remaining on her interest-free loan. It will take her 35 months to fully repay the $8,500 loan with monthly payments of $250.

Step-by-step explanation:

Susan has an interest-free loan of $8,500 from her father. She has committed to repay this loan at a rate of $250 per month. After one year, which is 12 months, she would have repaid a total of 12 x $250 = $3,000. Thus, the amount remaining on her loan after one year would be $8,500 - $3,000 = $5,500.

To determine when she will have paid off the loan completely, we divide the total loan amount by the monthly repayment amount. Therefore, $8,500 / $250 = 34 months. Since this is not a whole number, it will take her 35 months to fully repay the loan, with the last payment being less than $250.