Question

A business owner has two loans from the local bank. One of the loans is a three-year loan with a principal of $75,000 and an annual interest rate of 5%. The other is a one-year loan with a principal of $21,000 and an annual interest rate of 4.5%. What is the simple interest total for both loans for the first year?

Answer 1

$4,695.00

Step-by-step explanation:

Simple interest is just the interest rate times the principal (different than compound interest which adds the accrued interest back into the principal so that you are paying on the new bigger amount every year.)

Loan 1: .05* 75,000 = $3750

Loan 2: .045 * 21,000 = $945

Total for both loans = 945+3750 = 4,695