Question

A store manager obtained a loan of $25,000, at 6 3/8% interest, for 15 months to purchase supplies. find the amount of simple interest. round to the nearest cent.

Answer 1

The simple interest on a $25,000 loan at 6 3/8% interest for 15 months is calculated using the formula I = PRT. It amounts to $1,984.38 when rounded to the nearest cent.

Step-by-step explanation:

To calculate the simple interest on a loan, you can use the 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. In this case, the loan amount (P) is $25,000, the annual interest rate (R) is 6 3/8% or 0.06375 when converted to decimal, and the time (T) is 15 months, which is 1.25 years (since 15 months/12 months per year = 1.25 years).

To find the simple interest:

Simple Interest = Principal × Rate × Time
Simple Interest = $25,000 × 0.06375 × 1.25 = $1,984.375

Rounding to the nearest cent, the simple interest would be $1,984.38.