Question

Jackie took out a $9,000 personal loan with a 4.5% interest rate that she will pay back in 3 years. She will make monthly payments of $267.72. Calculate the total cost of repayment Jackie will pay.

Answer 1

Total cost of repayment is $10,852.92

Explanation:

Firstly, we need to calculate the interest attached to this loan repayment

To calculate this, we use the formula for simple interest

Mathematically,

I =
`(PRT)/(100)`

where P is the amount borrowed which is $9,000

R is the rate which is 4.5%

T is the time which is 3 years

Plugging these values, we have

I = (9000×4.5×3)/100 = $1,215

Now we were also told in the question that she will make a monthly repayment of $267.72

Now the number of months in 3 years is 36 months. Total monthly repayment = 267.72 × 36 = $9637.92

Adding the interest amount, we have 9637.92 + 1215 = $10,852.92