Joyce took out a small loan for $1,200. The interest on the loan was 10.5%, but she paid it off in just 18 months. How much did she pay back in interest?

Question

Mathematics

Titus Nixon

4 April, 08:54

Joyce took out a small loan for $1,200. The interest on the loan was 10.5%, but she paid it off in just 18 months. How much did she pay back in interest?

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Answers (1)

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Terry Moyer · Answer 1

She paid back $192 in interest

Step-by-step explanation:

A = P (1+r) ^n

P = $1,200

r = 10.5% = 0.105

n = 18 months = 18/12 = 1.5 years

A = 1,200 (1+0.105) ^1.5 = 1,200 (1.105) ^1.5 = 1,200*1.16 = 1,392

Amount = $1,392

Principal = $1,200

Interest = amount - principal = $1,392 - $1,200 = $192