Christy needs $25,000 to purchase a new car. she borrows this amount at an interest rate of 8% for 5 years. what is the amount of interest that will be paid?

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Business

Conley

21 July, 12:39

Christy needs $25,000 to purchase a new car. she borrows this amount at an interest rate of 8% for 5 years. what is the amount of interest that will be paid?

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Leilani Olsen · Answer 1

Principle is the amount borrowed or invested in or from a bank or a financial institution. In this case the principle is $ 25,000, interest rate is 8% and the interest period is 5 years.

Thus amount to be paid after a period of 5 years will be 25,000 (1 + 0.08) ∧5

= 25,000 (1.08) ∧5

=25,000 * 1.4693

=$36,733.20

To calculate the interest we subtract the principle sum from the Amount to be paid.

= $36733.20 - $25000=11733.20

Therefore, interest = $ 11733.20