Question

Joyce took out a small loan for $1,200. The interest on the loan was 10.5%, but she paid it off in just 18 months. How much did she pay back in interest?

Answer 1

She paid back $192 in interest

Explanation:

A = P(1+r)^n

P = $1,200

r = 10.5% = 0.105

n = 18 months = 18/12 = 1.5 years

A = 1,200(1+0.105)^1.5 = 1,200(1.105)^1.5 = 1,200×1.16 = 1,392

Amount = $1,392

Principal = $1,200

Interest = amount - principal = $1,392 - $1,200 = $192