Question

You need a simple interest bridge loan to cover the costs of buying a new home while waiting to close on your old one. You need to finance $58,000 and bank will charge 5%. How much interest will you pay if you needed the loan for 10 months?

Answer 1

The simple interest on a $58,000 loan at 5% for 10 months is $2,416.67, calculated using the simple interest formula with the respective principal, interest rate, and time period.

Step-by-step explanation:

To calculate the amount of simple interest paid on a bridge loan, you can use the simple interest formula I = PRT, where I is the interest, P is the principal amount, R is the annual interest rate (in decimal form), and T is the time in years. For a loan of $58,000 with a 5% interest rate for 10 months, convert the rate to decimal (0.05) and the time to years (10/12).

Calculate as follows: I = 58000 * 0.05 * (10/12). This gives us I = $2,416.67 as the total interest paid over 10 months.

The amount of interest paid on a $58,000 loan at a 5% interest rate over 10 months is $2,416.67. This is calculated using the simple interest formula with the given principal, rate, and converted time period.