Question

Larry wants to take out a loan from his bank for $1,600 to buy a bicycle. The interest rate on the loan from the bank is 11%. He wants to pay the total amount in 6 monthly payments. What is the amount that Larry would pay in interest for his loan?

Answer 1

To find the interest paid on the loan, we need to first calculate the total amount to be paid back, which includes the principal amount and the interest.

The interest on the loan is given by:

Interest = Principal x Rate x Time

where Rate is the interest rate per period and Time is the number of periods.

Here, the principal is $1,600, the interest rate is 11% per year, and the loan is being paid off in 6 monthly payments, which is half a year. So, the time period is 0.5 years.

Plugging these values into the formula, we get:

Interest = 1600 x 0.11 x 0.5 = $88

So, Larry would pay $88 in interest for his loan.