Your sister estimates that the total amount she will owe for a 5-year loan with an interest rate of 1.60% is a 12% increase of the original amount she would borrow from the bank. To determine if her estimate is correct or not, we need to calculate the total amount she will owe.
First, we need to find the interest amount for the loan. The formula to calculate the interest amount is:
Interest = Principal (original amount borrowed) * Interest Rate
Next, we add the interest amount to the original amount borrowed to find the total amount owed.
Finally, we compare the total amount owed with 12% more than the original amount borrowed. If they are equal, her estimate is correct. Otherwise, her estimate is incorrect.
~ LadyBrain