Question

A company takes out a loan for $5 million, which it has to pay back in five years, and it has to pay interest at the end of every year. The interest rate is 5.5%. • How much interest does the company have to pay every year?

Answer 1

the interest that need to pay each year is $275,000

Step-by-step explanation:

The computation of the interest that have the company to pay every year is shown below;

= Principal × rate of interest × time period

= $5,000,000 × 5.5% × 5

= $1,375,000

Now for each year it is

= $1,375,000 ÷ 5 years

= $275,000

Hence, the interest that need to pay each year is $275,000