Question

Chris is borrowing $8,500 for 5 years at 10%. payments are made on a monthly basis, which are determined using the add-on method. How much interest will Chris pay on the loan if it is held for the full five year term

Answer 1

$4,250

Step-by-step explanation:

Calculation for How much interest will be pay on the loan

Using this formula

Interest=Borrowed Amount*Percentage of Interest rate *Number of months

Let plug in the formula

Interest= $8,500*(10%/12) *60 months

Interest=$8,500*0.0083333*60 months

Interest = $4,249.9

Interest=$4,250(Approximately)

Note:5 years*12months will give us 60 months

Therefore the amount of interest that will be on the loan will be $4,250