Question

Chantelle takes out a loan of $3,500 with an APR of 4.25%. She will repay the loan in monthly payments for 6 months. To find the total amount of interest she will pay, Chantelle uses an online calculator. What are the correct numbers she should enter?

Answer 1

P = 3,500 r = 0.0425 n = 12 t = 0.5

Explanation:

P is the principal amount, which in this case is $3,500, or the start amount.

r is the interest rate, which is 4.25%. Change 4.5% to decimal form and it will be 0.0425.

n is the number of times the loan is repaid, or 12.

t is the time. In this case, the loan will be for 6 months, or half a year. Remember that variable t is always in term of years. In decimal form, half a year is 0.5.