Question

Dan borrowed $865.00 from his brother who is charging him 8% simple interest. If Dan pays his brother back in 6 months, how much does he have to pay back including the interest?

a) 415.20
b) 34.60
c) 1,280,20
d) 899.60

Answer 1

First, converting R percent to r a decimal

r = R/100 = 8%/100 = 0.08 per year.

Putting time into years for simplicity,

6 months / 12 months/year = 0.5 years.

Solving our equation:

A = 865(1 + (0.08 × 0.5)) = 899.6

A = $899.60

The total amount accrued, principal plus interest, from simple interest on a principal of $865.00 at a rate of 8% per year for 0.5 years (6 months) is $899.60.