Question

Jack just took out a $3,000 loan for a new snowmobile. The simple interest rate on his loan is 40% per year after 4 months how much interest will be charged ?

Answer 1

The amount of interest that wil be charged after 4 months is $400

Here, we want to calculate the amount of interest that will be charged.

To get this, we simply use the simple interest formula

Mathematically;

$\begin{gathered} \text{simple interest = }\frac{p\text{ }\times\text{ r}\times t}{100} \\ \\ \text{where P is the amount borrowed which is 3,000} \\ \\ r\text{ is the interest rate which is 40\%} \\ \\ t\text{ is the time which is 4 months; we express this as 4/12 = 1/3} \\ \\ \text{Substituting these values, we have;} \\ \\ \text{simple interest = }\frac{3000\text{ }\times40\text{ }\times\frac{1}{3}}{100\text{ }}\text{ = }\frac{1000\text{ }\times\text{ 40}}{100}\text{ = 400} \end{gathered}$