Homework #5
Question 9 of 12
AMORTIZATION Car loans are often spread into multiple regular payments over time. This process is called amortization. Each payment
reduces the remaining principal, and the interest accrued for the next payment is based on the reduced principal. The monthly payment is
fixed; so, with each subsequent payment, an increasing portion goes toward principal, and a decreasing portion goes toward interest. Lori
takes out a car loan of $15,000 for 3 years, with a 3% interest rate. When the loan is amortized into monthly payments, the total interest paid by
the end of the loan term will be $704.
Calculate the simple interest Lori would pay if the loan was not amortized and the entire loan was paid at the end of 3 years.
$15