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A simple interest installment loan calculates interest on the unpaid balance. An add-on Question 5 options: calculates the same way with the addition of a factor. calculates interest on the original balance. is less costly. is more costly. both calculates interest on the original balance and is more costly.

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An add-on calculates interest on the original balance and is more costly.

What is Simple Interest?

  • The fee that the borrower must pay the lender for the loan is known as interest.
  • The interest can be either simple or compounded, and it is commonly stated as a percentage.
  • A loan or deposit's principal amount serves as the foundation for simple interest.
  • Simple interest is often a predetermined percentage of the principle amount borrowed or lent paid or received over a specific time period.
  • Simple Interest is calculated using the formula: P×r×n;  where P = Principal Amount ; r = Annual Interest Rate ; n = Term of Loan in years.

By adding the total principal borrowed and the total interest due to a single number and multiplying that number by the number of years until payback, add-on interest is a way of determining the interest to be paid on a loan.

Know more about Simple Interest with the help of the given link:

https://brainly.com/question/25845758

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