To determine how much interest a borrower will pay over the life of Loan 2, we'll follow a step-by-step approach:
1. Identify the principal amount of Loan 2:
The principal amount for Loan 2 is [tex]$2500.00.
2. Identify the monthly payment for Loan 2:
The monthly payment for Loan 2 is $[/tex]80.00.
3. Identify the duration of Loan 2 in months:
The duration for Loan 2 is 36 months.
4. Calculate the total amount paid over the life of Loan 2:
The formula to find the total amount paid is:
[tex]\[
\text{Total Amount Paid} = \text{Monthly Payment} \times \text{Duration Months}
\][/tex]
Plugging in the given values:
[tex]\[
\text{Total Amount Paid} = 80.00 \times 36 = 2880.00
\][/tex]
5. Calculate the total interest paid:
The interest paid is the difference between the total amount paid and the principal amount. The formula to find the total interest is:
[tex]\[
\text{Total Interest Paid} = \text{Total Amount Paid} - \text{Principal}
\][/tex]
Substituting the values we have:
[tex]\[
\text{Total Interest Paid} = 2880.00 - 2500.00 = 380.00
\][/tex]
Therefore, the borrower will pay \$380.00 in interest over the life of Loan 2.
