Question

Jeff obtained a simple interest loan from his bank for $6000 at a 12.7% interest loan over a 3-year loan term. Using the simple interest formula, what will be Jeff's total repayment over the life of the loan?

Answer 1

$8286

Explanation:

Jeff must obviously repay the original $6000 loan, plus simple interest.

The formula for simple interest is i = prt, where p is the principal, r is the interest rate as a decimal fraction, and t is the time, in years. Here we have

i = $6000*0.127*3, or i = $2286.

Adding these two quantitites together, we get A = p + prt +

$6000 + $2286 = $8286