If $2,500 is loaned for 18 months at a 4.5% annual rate, how much interest will need to be paid?

Answer 1

If you are looking for the total interest to be paid you would use the formula: loan amount X interest = total loan amount.

convert your 4.5% into a decimal by dividing it by 100. Your decimal will be 0.045

$2,500 X 0.045 = $112.50 total interest amount

If you want how much interest you will pay each month use this formula: interest amount / number of months.

$112.50 / 18= $6.25 per month