megan borrows £5000 to buy a cat at a rate of 8% over 3 years. how much does she have to pay over the three years? if she pays the loan back every month over three years ,how much is her monthly payment?
if there was an arrangement fee of £500 for the initial loan, calculate the APR for the loan
Five thousand pounds for a cat?
ms. sue sorry car
To calculate the total amount Megan has to pay back over three years, we need to consider both the principal amount (the loan amount) and the interest.
1. Total amount to be paid back:
The formula to calculate the total amount to be paid back is:
Total amount = Principal + Interest
In this case, the principal is £5000. To calculate the interest, you can use the formula:
Interest = Principal * Rate * Time
Rate: 8% (which should be divided by 100 to convert it to decimal form, i.e., 0.08)
Time: 3 years
Interest = £5000 * 0.08 * 3 = £1200
Total amount = £5000 + £1200 = £6200
Therefore, Megan has to pay a total of £6200 over the three years.
2. To calculate the monthly payment, divide the total amount by the number of months:
Number of months = 3 (years) * 12 (months/year) = 36 months
Monthly Payment = Total amount / Number of months = £6200 / 36 = £172.22 (rounded to two decimal places)
Therefore, Megan's monthly payment is approximately £172.22.
3. To calculate the APR (Annual Percentage Rate) for the loan with an arrangement fee, you need to consider both the interest and the fee. The APR is the annualized interest rate, taking into account all costs associated with the loan.
To calculate the APR, use the following steps:
- Subtract the fee from the total loan amount: £5000 - £500 = £4500.
- Calculate the interest for this adjusted loan amount over three years, using the same formula as before: Interest = £4500 * 0.08 * 3 = £1080.
- Add the interest and the fee: £1080 + £500 = £1580.
- Divide the total interest and fee by the initial loan amount: £1580 / £5000 = 0.316.
- Multiply the result by 100 to convert it to a percentage: 0.316 * 100 = 31.6%.
Therefore, the APR for the loan, including the arrangement fee, is approximately 31.6%.