Tuck took out a loan of $61400.00 to purchase a truck. The term of the loan is 3.5 years. How much will Tuck repay in total if the interest rate is 7.85% per annum, compounded monthly
To find the total amount Tuck will repay, we need to calculate the compound interest on the loan amount.
First, let's convert the interest rate to a monthly rate. The monthly interest rate is the annual interest rate divided by 12. So, we have:
Monthly interest rate = (7.85% / 100) / 12 = 0.0065
Next, let's calculate the total number of periods Tuck will make payments, which is the total number of years multiplied by 12. So, we have:
Total number of periods = 3.5 * 12 = 42
Now, we can use the compound interest formula to calculate the total repayment amount:
Total repayment amount = Loan amount * (1 + Monthly interest rate)^Total number of periods
Total repayment amount = $61400 * (1 + 0.0065)^42
Total repayment amount = $61400 * (1.0065)^42
Total repayment amount ≈ $71,105.92
Therefore, Tuck will repay a total amount of approximately $71,105.92.