michael borrowed 150,000 from the bank at 4% interest he paid the bank ₱6,000 every year for a total of ₱30,000 in 5 years.
Answer (1)
Answer:Let's break this down:1. Principal (Amount Borrowed): Michael borrowed ₱150,000.2. Interest Rate: The interest rate is 4% per year.3. Payments Made: He paid ₱6,000 each year for 5 years, so in total, he paid ₱30,000 (₱6,000 × 5 years).Now, let’s see if the payments he made are enough to cover both the interest and part of the principal.Step 1: Calculate the Interest for Each YearThe interest is based on the principal and is calculated at 4% per year.Year 1: ₱150,000 × 0.04 = ₱6,000Year 2: ₱150,000 × 0.04 = ₱6,000Year 3: ₱150,000 × 0.04 = ₱6,000Year 4: ₱150,000 × 0.04 = ₱6,000Year 5: ₱150,000 × 0.04 = ₱6,000The interest for each of the five years is ₱6,000. Since Michael only paid ₱6,000 each year, his payments covered the interest but did not reduce the principal.Conclusion:Over the 5 years, Michael paid ₱30,000, which went entirely towards the interest.The principal of ₱150,000 remains unpaid, meaning after 5 years, Michael still owes the full amount of ₱150,000 to the bank.To reduce the principal, he would need to pay more than the interest amount each year.
