If you borrow 90000 at an annual rate of 5 percent for 20 yrs what is the total amount you will pay?

Answer 1

If you keep the entire $90,000 throughout the 20 years, paying interest yearly, and pay back the principle at the end of the loan period, at the end of the 20th year: Yearly interest expense will have been $4,500.00. At the end of the lone term, the principle of $90,000.00 must be re-payed. So, the $90,000.00 that was borrowed plus another 90,000.00 in total interest means a total pay-back of $180,000.00.

*If, however, the loan is amortized, as soon as the 20 years begins, you begin to repay the $90,000 in small, steady, equal payments, at a rate that will pay it back in exactly 20 years:

The average amount of unpaid principle throughout the 20 year period is $45,000, more than that for the first 10 years, and less than that for the last 10 years, but

the average throughout the loan period is $45,000. Annual interest on $45,000 is

$2,250. It's paid for 20 years, and totals (2,250 x 20) = $45,000. Over the life of

the loan, the total pay-back is the $90,000 borrowed plus $45,000 interest = $135,000 .