Gerritt wants to purchase a $28,000 vehicle. His loan has a 7.4 year term and an interest rate of 5.43 percent compounded monthly. So $401.43 is his monthly payment.
what is interest?
- In the fields of finance and economics, interest is defined as the payment of a sum over and above the principle amount (the amount borrowed) at a set rate by a borrower or deposit-taking financial institution to a lender or depositor.
- interest is different from a charge that the borrower may pay to the lender or another entity.
- It also differs from a dividend, which is money given to shareholders (owners) by a company from its profit or reserve, but not at a set rate predetermined beforehand, but rather on a pro rata basis as a portion of the rewards received by risk-taking businesspeople when revenue is earned that exceeds all costs.
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