SOLUTION: A bank loan of $8000 is repaid in annual payments of $1000 plus 10% interest on the unpaid balance. What is the total amount of interest paid? Thank you for asking

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Question 1197708: A bank loan of $8000 is repaid in annual payments of $1000 plus 10% interest on the unpaid balance. What is the total amount of interest paid?
Thank you for asking
Found 3 solutions by Theo, MathTherapy, ikleyn:
Answer by Theo(13342)   (Show Source): You can put this solution on YOUR website!
if you use a financial calculator, it will tell you the following:
the bank loan will be completely payed off in 16.888631703 years.
the total payments will have been that * 1000 = 16,886.31703 dollars.
that minus 8000 = 8,886.31703 dollars.
that's the total interest paid on the loan.
what actually happens is between you and the bank and how they handle the last year of payment.





Answer by MathTherapy(10552)   (Show Source): You can put this solution on YOUR website!
A bank loan of $8000 is repaid in annual payments of $1000plus 10% interest on the unpaid balance.What is the total amount of interest paid?
Thank you for asking
I'm very surprised to see someone who's supposed to be a "tutor" spell the past tense of pay as "p-a-y-e-d" instead of the
CORRECT spelling, P-A-I-D, ESPECIALLY when the "student" spells it correctly! Never seen anything like this! I definitely would
expect this from a person whose 1st language is NOT ENGLISH!

The agreement is that $1,000 is paid every year, so there will be 8 payments to pay off this loan. Each year, starting with year
1, the interest would be 10% of the balance. Hence, the 10% interest is 1st PAID on the $7,000 balance ($700) after the 1st $1,000 payment
is made. The 2nd payment would then be on a balance of $6,000, then $5,000, and so forth, for a total of 7 (8 - 1) interest payments.
The interest payments for this particular problem can be done MANUALLY because there're only 8 loan payments and 7 (8 - 1) interest
payments. However, should a problem consist of many more interest payments, it's a lot easier to use the 
formula for the sum of an AP: 
                               ---- Substituting 7 for n, 700 for a1, and - 100 for d.
                              
                 Sum of 7 years' interest payments of 10% on loan balance after a $1,000 loan payment is made each year, or

Answer by ikleyn(52781)   (Show Source): You can put this solution on YOUR website!
.
A bank loan of $8000 is repaid in annual payments of $1000 plus 10% interest on the unpaid balance. What is the total amount of interest paid?
Thank you for asking
~~~~~~~~~~~~~


To tutor @MathTherapy:

        Dear @MathTherapy,  it is not a crime if a  Math tutor's first language is not  English,

        and it is not a reason for such a person not to be a  Math tutor.


For me,  the only criterion is if a person solves  Math problems in a right way
and if his  (or her)  writing is understandable.  In short,  if a person is able to teach  Math.


Good style of writing and presenting solutions is also important  (as a special addition),
but it is just in the second row of importance.


For making perfect English language,  there are special editors,
and perfect  English is not a necessary condition to be a  Math tutor at this forum.


Do not mix different things and different conceptions.



Now my next notice goes to the visitor,  who posted this message.
It ends with the words  " Thank you for asking ".


Is my understanding correct,  that with these words you express your gratitude to yourself ?

At least,  from your post it becomes clear to me that you even do not read what you write,  copy/paste and submit.


I am very sad of it . . .



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