Question

A loan of $8,000 is paid back in two years in monthly payments of $400. The percentage interest on the loan was

(a) 5%
(b) 8 ⅓%
(c) 16 ⅓%
(d) 20%​

Answer 1

D

Explanation:

The number of months in two years is 24 months.

Now, with a repayment plan of $400 per month, the total amount returned will be 400 * 24 = $9,600

Now, $8,000 was borrowed but $9,600 was returned

The amount of interest is 9600-8000 = 1600

So what percentage of 8,000 is 1600?

1600/8000 * 100 = 16/80 * 100 = 1/5 * 100 = 20%