To calculate the total interest and monthly payment using the add-on method, we follow these steps:

Given:

• Amount of loan ($P$): $4400
• Length of loan ($t$): 5 years
• Interest rate ($r$): 4.8% (0.048 as a decimal)

Step 1: Total Interest

The formula for total interest in the add-on method is:

$\text{Total Interest} = P \times r \times t$

Substituting the values: $\text{Total Interest} = 4400 \times 0.048 \times 5$ $\text{Total Interest} = 1056$

Step 2: Total Amount to Repay

The total amount to repay is the principal ($P$) plus the total interest:

$\text{Total Amount to Repay} = P + \text{Total Interest}$ $\text{Total Amount to Repay} = 4400 + 1056 = 5456$

Step 3: Monthly Payment

The monthly payment is calculated by dividing the total amount to repay by the total number of months:

$\text{Monthly Payment} = \frac{\text{Total Amount to Repay}}{\text{Total Months}}$ Since the loan term is 5 years, the total months are: $\text{Total Months} = 5 \times 12 = 60$

Now: $\text{Monthly Payment} = \frac{5456}{60} = 90.93$

Final Answers:

• Total Interest: $1056
• Monthly Payment: $90.93

Would you like additional details or calculations?

Here are 5 related questions to expand your understanding:

1. How does the add-on method differ from simple interest in terms of monthly payments?
2. What would the monthly payment be for a shorter loan term, say 3 years?
3. How would a higher interest rate (e.g., 6%) impact the total interest and monthly payment?
4. Can this method be applied to other types of loans, such as mortgages?
5. How can a borrower minimize their total interest when using the add-on method?

Tip: Always consider the total cost of the loan (interest + principal) when comparing loan offers, not just the monthly payment.