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Suppose that Marlie had decided to apply for a private loan rather than a federal loan. She has

been offered a private loan for 10 years with an APR of 7.8%.

a. Determine her monthly payment.

b. What is the total amount she will pay back?

c. What is the total interest amount?

Sagot :

Using simple interest, and considering a loan of $5,000, it is found that:

a) Her monthly payment is of $74.17.

b) She will pay back $8,900.

c) The total interest amount is of $3,900.

The amount of money after t years in simple interest is modeled by:

[tex]A(t) = A(0)(1 + rt)[/tex]

In which:

  • A(0) is the initial amount.
  • r is the interest rate, as a decimal.

In this problem:

  • The loan is of $5,000, hence [tex]A(0) = 5000[/tex].
  • The APR is of 7.8%, hence [tex]r = 0.078[/tex]
  • 10 years, hence [tex]n = 10[/tex]

Item b:

[tex]A(10) = 5000[1 + 0.078(10)] = 8900[/tex]

She will pay back $8,900.

Item a:

$8,900 will be paid in 10 x 12 = 120 months, hence:

[tex]M = \frac{8900}{120} = 74.17[/tex]

Her monthly payment is of $74.17.

Item c:

Loan of $5,000, pays back $8,900, hence:

8900 - 5000 = 3,900

The total interest amount is of $3,900.

A similar problem is given at https://brainly.com/question/13176347

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