Question

Your business requests a 3-month loan for
$450,000. What will be the interest paid at the
end of the term if the business risk percentage is
assessed at 2.2% and LIBOR is at 2.8%?
interest paid = $ [?]
Round to the nearest hundredth.

Answer 1

The total interest paid for the period of three months will be $5225 on the loan amount of $450000.

What is interest?

The interest is the charges levied on the amount which we borrow from any bank for a particular period of time.

Here in the question given data is

P= $450000

R=2.2%+2.8%=5%

T=1/4 years or three months

So from the simple interest formula

$\rm SI=\dfrac{P\times R\times T}{100}$

$\rm SI=\dfrac{450000\times 5\times 1}{100\times 4}$

$\rm SI= \ 5625$

Hence the total interest paid for the period of three months will be $5225 on the loan amount of $450000.

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