Question

Josh borrowed $50,000 from the bank to buy a new truck. The bank is going to charge him an interest rate of 6.9%. If his loan lasts 39 months, choose the correct equation to determine Josh's simple interest.

Answer 1

Simple interest = (50000 * 0.00575 * 39)

Explanation:

Given that:

Principal =. Amount borrowed = $50,000

Interest rate (r) = 6.9%

Time = 39 months

To obtain the simple interest ;

Use the relation :

Simple interest = principal * rate * time

Since the time is given in years ; rate = 0.069 / 12 = 0.00575

Hence,

Simple interest = (50000 * 0.00575 * 39)

Or

Convert 39 months to years = 39/12 = 3.25 years

Simple interest = (50000 * 0.069* 3.25)