Question

Gwen takes out a loan of $400 to pay for an online course. Flat rate interest is charged at 8% p.a

If she repays the loan in 3
months, how much interest does she pay in total?

Answer 1

We know, 1 year = 12 month.

So, 3 month = 3/12 = 0.25 year.

Now, principle amount, P = $400 .

Rate is, r = 8% = 0.08

Time period, t = 0.25 year.

Now, Interest is given by :

I = P × r × t

I = $( 400 × 0.08 × 0.25 )

I = $8

Therefore, she will pay $8 interest in total.