23 July, 20:43
Spencer takes out a home improvement loan for 30,000 at an interest rate of 5.5%. How much does he owe, and what is his monthly payment if he chooses the 7-year loan payment plan?
23 July, 21:24
Use the simple interest formula: A = P (1 + rt) where P is the Principal amount of money to be invested at an Interest Rate R% per period for t Number of Time Periods.
First, converting R percent to r a decimal
r = R/100 = 5.5%/100 = 0.055 per year.
Solving our equation:
A = 30000 (1 + (0.055 * 7)) = 41550
A = $41,550.00
The total amount accrued, principal plus interest, from simple interest on a principal of $30,000.00 at a rate of 5.5% per year for 7 years is $41,550.00.
23 July, 22:37
Formula for calculating simple interest is : Simple Interest=P x R x T/100
Step 1: Identify P, R, T
P: Principal amount-basic amount of the loan (30,000)
R: The interest rate of the loan (5.5%)
T: Time of payment of loan-in years (7 years)
Step 2: Substitute the values
Simple Interest = P x R x T/100
Simple Interest = 30,000 x 5.5 x7
Simple Interest = 1155000
Simple Interest = 11550
Let's answer the first part of the question: "How much does he owe?"
Step 1: We have calculated simple interest which is 11550.
Step 2: The principal amount has to be paid with the simple interest.
Step 3: Formula - Total money owed = Principal amount + Simple Interest
Total money owed = 30,000 + 11550=41550
Now let's answer the second part of the question: "What is the monthly payment if he chooses the 7-year loan payment plan?"
Step 1: Calculate how many months are there in 7 years. Each year has 12 months therefore 7 years have (7 x 12) 84 months.
Step 2: Divide the total amount that has to be paid by the number of months it has to be paid in.
Monthly payment = Total money owed / total number of months
Monthly payment = 41550 / 84
Monthly payment = 494.64
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» Spencer takes out a home improvement loan for 30,000 at an interest rate of 5.5%. How much does he owe, and what is his monthly payment if he chooses the 7-year loan payment plan?