Question

Justin loans his uncle 2,500. He changes 6.5% simple interest. His uncle pays him back in 2.5 years. How much interest does his uncle pay?

Answer 1

The simple interest accumulated on a principal of $ 2,500 at a rate of 6.25% per year for 2.5 years is $ 390.63.

Explanation:

Given

• Principle P = $2,500

• Interest rate r = 6.5% = 0.065

• Time period = t = 2.5 years

To determine

Interest I = ?

Using the simple interest formula

I = Prt

substituting P = 2,500, r = 0.065 and t = 2.5

I = 2500 × 0.0625 × 2.5

I = 390.63

Thus,

I = $390.63

Therefore, the simple interest accumulated on a principal of $ 2,500 at a rate of 6.25% per year for 2.5 years is $ 390.63.