Answered

IDNLearn.com: Your trusted source for finding accurate and reliable answers. Our community is here to provide the comprehensive and accurate answers you need to make informed decisions.

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 appreciate every question and answer you provide. Keep engaging and finding the best solutions. This community is the perfect place to learn and grow together. IDNLearn.com has the solutions to your questions. Thanks for stopping by, and see you next time for more reliable information.