DougDough has a car loan for $13,000 at 8 1/2 % interest. How much interest will he pay in 5 years ?

Question

Dough has a car loan for $13,000 at 8 1/2 % interest. How much interest will he pay in 5 years ?

a. $5,200
b. $5,525
c. $5,850
d. $7,475

Answer 1

If it is simple interest, then
I = Prt
I = 13000*.085*5
I = 5,525

Answer 2

Assuming the interest is not compounded and no payments are made on the loan during the 5 years, the answer is B. $5,525
8.5% interest or .085 times $13,000 is $1,105 this is the amount annually, so multiply it by 5 years and you get $5,525

Answer 3

None of the above. The calculated interest for a loan of $13,000 at 8.5% interest for 5 years is $3,002.89

Check out the amortization table at
http://www.bankrate.com/brm/auto-loan-calculator.asp?unroundedPayment=1318.7383084501534&loanAmount=13000&nrOfYears=5&nrOfMonths=60&interestRate=8.5&startMonth=5&startDay=7&startYear=2006&monthlyPayment=+++++%3D%3D%3D%3E&showAmort=Show%2FRecalculate+Amortization+Table&monthlyAdditional=0&yearlyAdditional=0&yearlyAdditionalMonth=5&oneAdditional=0&oneAdditionalMonth=5&oneAdditionalYear=2006&paidOffDate=Jun+7%2C+2007

Answer 4

If he only pays interest (no principal), he will pay $5525 over the 5 years.

Presuming that he will be paying interest AND principal, each year he would be paying the 8.5% on less money each year, and the only available choice at that point (since $5525 is the MOST he can pay (without late payments, etc)) would be option A - $5200.

But again, that all depends on how much his monthly payments are, and if he pays them on time. :-)

Answer 5

8.5/100 = o.o85

0.085 x 13000 = 1105

1105 x 5 5525

therfore the answer is b

Answer 6

I = PRT
I = 13000 * .085 * 5
I = 5525

ANS : b.) $5,525