Question

Question 8 Jack borrows $2.700 at a rate of 8.2% per year. How much simple interest will he owe if it takes 3 months to repay the loan? Round to the nearest cent.

Answer 1

The amount of simple interest he will owe is $55.35

Here, we want to calculate the amount of interest to be paid

To do this, we use the simple interest formula

Mathematically, we have the formula as;

$\begin{gathered} I\text{ = }\frac{P\times R\times T}{100} \\ \end{gathered}$

P is the principal, representing the amount borrowed which is $2,700

I is the interest we want to calculate

R is the rate which is 8.2%

T is the time which is 3 months (since the time is nit given in years, we divide by 12)

Substituting these values, we have it that;

$\begin{gathered} I\text{ = }\frac{2,700\times8.2\times3}{100\times12} \\ I\text{ = 55.35} \end{gathered}$