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What is the interest owed on a loan of $100 at 10% for 3 months?

1 Answer

3 votes

Answer:

$2.50

Step-by-step explanation:

The information is somewhat incomplete. It does not state whether simple or compound interest which could make a difference

I am assuming simple interest

The formula for simple interest is

I = Prt

where I is interest

P is amount of loan

r is annual rate of interest expressed as a decimal

t = number of years

We are given
P = $100
r = 10$ = 10/100 = 0.10

t = 3 months = 3/12 year = 1/4 th of a year

I = 100 x 0.10 x 1/4 = $2.50

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