Jose borrowed $800 from his local credit union for 8 months at 6% simple interest. He agreed to pay the loan by making 8 equal monthly payments/
a. how much is the finance charge
b. what is the total amount to be repaid
c. how much is the monthly payment
Simple interest means an portion of the principal is added to the principal. In this case the 6% simple interest is will be only from the principal amount which is $800.
A. The finance charge or the interest is $48 ( 6% of $800). B. The total amount to be repaid is $800 (principal amount) + $48 (6% interest) = $848. C. To equally pay off the total amount every month, we simply divide $848 by 8 months. $848 / 8 months = $106. The monthly payment would be $106.
