Question

Lynn takes out a loan for $7540 that charges an annual simple interest rate of 6.5%. She does not make any payments for 2 1/2 years. How much will Lynn owe on her loan after 2 1/2 years?



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Answer 1

The formula for simple interest is: Total amount = Principal ( loan amount) x (1 + interest rate x time (years).

Using the given information you have:

Total = 7540 x (1 + 0.065 x 2.5)

Total = 7540 x (1 + 0.1625)

Total = 7540 x 1.1625

Total = $8,765.25