Simple interest is a method of calculating interest on an amount for n period of time with a rate of interest of r. It will take 308 months for Diego to pay the complete loan.
Simple interest is a method of calculating interest on an amount for n period of time with a rate of interest of r. It is calculated with the help of the formula,
SI = P×T×R
where SI is the simple interest, P is the principal amount, R is the rate of interest, and T is the time period.
The interest that will be charged on the principal amount is,
SI = $159,000×30×0.0505 = 240,885
Now, the total amount that Diego needs to pay is the sum of interest and principal, therefore,
Total amount = $159,000 + $240,885 = $399,885
Further, since each month Diego is paying $1300, therefore, the number of months it will take to pay the complete loan is,
Number of months = $399,885/$1300 = 307.6 ≈ 308
Hence, it will take 308 months for Diego to pay the complete loan.
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