Answer:
Total amount owing at the end of 5 years = $25,560
Monthly repayment = $426
Step-by-step explanation:
The amount of simple interest for a loan is given by:
I = P · r · t /100
where
P = principal(amount borrowed)
r = annual rate of interest in percent
t = number of years
We are given
P = 18,000
r = 8.4%
t = 5 years
Therefore interest at the end of 5 years is
I = 18000 x 8.4 x 5 /100 = 7,560
The total amount owed at the end of 5 years is the principal plus the interest
A = P + I
A = 18000 + 7560
A = 25,560
Therefore, the total amount owing at the end of 5 years is $25,560
To calculate the monthly payments for 5 years we note that 5 years = 12 x 5 = 60 months
So,
Monthly repayment = Total Amount / Total Number of Months
= $25,560 / 60
= $426
