Your rich Uncle Ralph is willing to loan you $50,000 for five years, so long as you pay interest each month. He asks for a simple interest rate of 24% per year. How much will you pay each month?

Question

Quizplus · Accepted Answer

The simple interest for one year on $50,000 at a 24% rate is $50,000 * 0.24 = $12,000. Over five years, this totals $12,000 * 5 = $60,000 in interest. Dividing this total interest by 60 months (5 years) gives a monthly payment of $1,000.

Your Rich Uncle Ralph Is Willing to Loan You $50,000