Question

Mia borrowed $5,000 from her grandparents to pay college expenses. She pays them $25 each month, and simple interest at an annual rate of 5% on the remaining balance of the loan at the end of each year.

How many years will she pay interest? Explain.

Answer 1

Mia will pay interest for 100 years.

Step-by-step explanation:

Mia borrowed 5,000 from her grandparents to pay college expenses. She pays them 25 each month, and simple interest at an annual rate of 5% on the remaining balance of the loan at the end of each year. To calculate how many years she will pay interest, we can use the formula:

Remaining Balance = Principal - Total Payments + Total Interest

Let x be the number of years Mia will pay interest. The total payments she makes each year is 25 * 12 = 300. The total interest for x years is 5,000 * 0.05 * x = 250x. So, the equation becomes:

Remaining Balance = 5,000 - 300x + 250x

Since she will continue paying until the balance reaches zero, we can set the equation equal to zero and solve for x:

5,000 - 300x + 250x = 0

5,000 - 50x = 0

50x = 5,000

x = 100

Mia will pay interest for 100 years.

Answer 2

25×12=300 for the year
5000-300=4700

5%×4700=235
235÷25=9.4