To pay for car repairs, you take out a simple interest loan for $1560 at a rate of 9.5% for 120 days. Answer parts (a) - (c).
(a) What is the total amount repaid on the loan?
To calculate the total amount repaid on the loan, we need to add the principal amount to the interest accrued over 120 days.
Total amount repaid = Principal + Interest
Total amount repaid = $1560 + ($1560 * 0.095 * (120/365))
Total amount repaid = $1560 + $46.10
Total amount repaid = $1606.10
Therefore, the total amount repaid on the loan is $1606.10.
(b) What is the total interest paid on the loan?
To calculate the total interest paid on the loan, we subtract the principal amount from the total amount repaid.
Total interest paid = Total amount repaid - Principal
Total interest paid = $1606.10 - $1560
Total interest paid = $46.10
Therefore, the total interest paid on the loan is $46.10.
(c) What is the annual percentage rate (APR) for this loan?
To calculate the APR for the loan, we need to find the equivalent annual interest rate based on the interest accrued over 120 days.
APR = (Interest / Principal) * (365 / 120)
APR = ($46.10 / $1560) * (365 / 120)
APR = 0.029487 * 3.0417
APR = 0.089802
Therefore, the annual percentage rate (APR) for this loan is 8.98%.