$8,000 interest will accrue during the life of the loan. Interest is the payment of an amount above the principal sum by a borrower or deposit-taking financial institution to a lender or depositor at a specific rate.
In finance and economics, interest is the payment of an amount above repayment of the principal sum by a borrower or deposit-taking financial institution to a lender or depositor at a specific rate by a borrower or depositor.
A customer would usually pay interest to borrow from a bank, so they pay the bank more than they borrowed; or a customer may earn interest on their savings, so they withdraw more than they originally deposited. In the case of savings, the customer is the lender, while the bank is the borrower.
It is calculated by multiplying the principal, rate of interest and the time period. The formula for Simple Interest (SI) is “principal x rate of interest x time period divided by 100” or (P x Rx T/100).
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