Question

Mary borrows $1250 from the bank. The loan term is 18 months with 5% annual interest. How much interest will she pay? How much will she pay back in all?

You will need to provide the solution to the problem explaining the intermediate steps you used in the process.

Answer 1

• Interest for 18 months = $93.75

• She will pay back in all = $1343.75

Explanation:

Interest for 18 months:

`(18\ months)/(12\ months) *5\%*\$1250`

`=(18)/(12) *(5)/(100) *\$1250`

= $93.75

She will pay back in all:

loan + interest

= $1250 + $93.75

= $1343.75