Question

1. Ann took out a loan at the Bank of Florida with a principle amount of $12,000, at an interest rate of 5.65% for 4 years. What is the amount of her interest?

2. Dan borrowed $1,250.00 from his brother who is charging him 5% simple interest. If Dan pays his brother back in 18 months, how much does he have to pay back including the interest?


Could you please give me the answers to both please

Answer 1

1. $2,950.62

2. $93.75

Explanation:

Ann took out a loan of = $12,000

At an interest rate of = 5.65%

Time = 4 years

Formula of compound interest =
`A=P(1+(r)/(n))^(nt)`

=
`A=12,000(1+(0.0565)/(1))^(1* 4)`

=
`12,000(1.0565)^(4)`

= 12,000 × 1.24588514

Interest = Amount - principal amount

= $14,950.62 - 12,000

= $2,950.62

Amount that Dan borrowed = $1,250

rate of interest = 5%

Time = 18 months or 1.5 years

Formula of simple interest = P(1+rt)

= 1250(1+(0.05 × 1.5))

= 1250(1+0.075)

= 1250 × 1.075

= 1343.75

Interest = Amount - principal

I = 1343.75 - 1250

= $93.75