I need help with this question:
A student borrows $5000 to buy a used car. The loan payments are $150 a month at 9% annual interest, compounded monthly.
It took the student approximately 3.25 years to repay the loan. How much money did the student pay?
The answer is approximately $5775, how should I get this number?
If you work out the exact number of months that took him to pay the $5000 loan @150 per month, you will see that it took 38.50 months to pay off the loan. Each month he paid $150. So, just multiply the two together:
$150 x 38.50 months =$5,775 which includes both principal + interest.