Question

Peter borrows $5000 at 1.5% per month reducible interest. If he repays the loan in equal monthly
instalments over 8 years, how much is each instalment, and what is the total interest charged on the loan?
Compare this to taking the same loan, but at a rate of 15% p.a. flat rate.

Answer 1

Answer:

the interest would be $900 at the rate of 1.5% which make the total $5900, each month Peter would pay $61.46 per month. Paying the flat rate of 15% would save money because you would have to only pay $5750, per month would cost $59.90 per month.

Step-by-step explanation:

0.015 x 5000 = 75

75 x 12 = 900

12 x 8 = 96

5900/96 = 61.4583 round up = 61.46 per month

V.S.

0.15 x 5000 = 750

5000 + 750 = 5750

5750/96= 59.90 per month