Ted takes out a student loan to pay for his college tuition this year. Find the interest on the loan if he borrowed $2,500 at an annual interest rate of 6% for 15 years. What is the formula to figure this out ?
amount = 2500(1.06)^15 = 5991.40
so the interest for that time is $3491.40
To calculate the interest on a loan, you can use the formula:
Interest = Principal × Rate × Time
In this case, the principal (P) is $2,500, the rate (R) is 6% (which needs to be converted to a decimal by dividing by 100, so R = 0.06), and the time (T) is 15 years.
Now, we can substitute these values into the formula:
Interest = $2,500 × 0.06 × 15
To simplify the calculation, you can first multiply the principal and the rate:
Interest = $2,500 × 0.9
Finally, multiply the result by the time (15 years):
Interest = $2,250
Therefore, the interest on the loan is $2,250.