Answered

Get reliable answers to your questions at Westonci.ca, where our knowledgeable community is always ready to help. Our Q&A platform provides quick and trustworthy answers to your questions from experienced professionals in different areas of expertise. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform.

Tanner takes out a loan today and repays the loan with eight level annual payments, with the first payment one year from today. The payments are calculated based on an annual effective interest rate of 4.75%. The principal portion of the fifth payment is 699.68.
Calculate the total amount of interest paid on this loan.
a) 1239
b) 1647
c) 1820
d) 2924

Sagot :

Answer:

Total interest = 1239.12

Explanation:

Assume;

Loan amount = P

Annual payment = X

P[1st payment] = X/[1+0475]⁸

P[1st payment] = X/[1.0475]⁸  

P[5th payment] = X/[1+0.0475]⁴

P[5th payment] = X/[1.0475]⁴

P[5th payment] = 699.68

So,

X = 699.68[1.0475]⁴

X = 842.39

P = (842.39/0.0475)(1 – 1/1.0475⁸)

P = 5,500  (Approx)

Total interest = [842.39 x 8] - 5,500

Total interest = 1239.12

We hope this was helpful. Please come back whenever you need more information or answers to your queries. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Thank you for using Westonci.ca. Come back for more in-depth answers to all your queries.