Aleeza has a balance of $25,000 on a school loan and the compound interest rate is 3%. How much interest will she pay if she pays it off in 15 years?
$63,949.19
$11,250.00
$38,949.19
$13,949.19
$13,949.19
To calculate the total amount paid, you can use the compound interest formula:
A = P(1 + r/n)^(nt)
Where:
A = Total amount paid
P = Principal amount (initial balance)
r = Annual interest rate (in decimal form)
n = Number of times interest is compounded per year
t = Number of years
In this case:
P = $25,000
r = 0.03
n = 1 (compounded annually)
t = 15 years
A = $25,000(1 + 0.03/1)^(1 * 15)
A = $25,000(1.03)^15
A = $39,949.19
Total amount paid = $39,949.19
Total interest paid = $39,949.19 - $25,000
Total interest paid = $14,949.19
So, Aleeza will pay $13,949.19 in interest if she pays off the loan in 15 years.