Final answer:
To calculate the interest on a $700 loan at 10 percent for 9 months, we use the simple interest formula I = PRT. After plugging in the values, the calculation yields an interest payment of $52.50.
Step-by-step explanation:
To find the amount of interest paid on a $700 loan at 10 percent interest over 9 months, you need to use the simple interest formula:
I = PRT
Where:
- I is the interest
- P is the principal amount ($700)
- R is the annual interest rate (10% or 0.1)
- T is the time in years (9 months or 9/12 of a year)
We first convert the interest rate from a percentage to a decimal by dividing by 100, and the time period to years by dividing the number of months by 12. Once we have these numbers, we can multiply them with the principal to find the interest.
Calculation:
I = $700 × 0.1 × (9/12)
I = $700 × 0.1 × 0.75
I = $700 × 0.075
I = $52.50
So, a person would pay $52.50 in interest to borrow $700 for 9 months at a 10 percent interest rate.