A couple takes out a short-term loan of $1,000 at 4.35% for 90 days to pay for unexpected car repairs. How much interest will they owe the bank? Round to the nearest cent.

Question

asked Oct 16, 2024 108k views

1 Answer

The Deals Dealer · Answer 1 · 2024-10-21T10:05:24+0000

The couple will owe approximately $10.87 in interest to the bank.

To calculate the interest owed on a short-term loan, you can use the formula:

Interest = Principal x Rate x Time

In this case, the principal is $1,000, the rate is 4.35% (or 0.0435), and the time is 90 days (or 0.25 years).

Plugging in these values into the formula, we have:

Interest = $1,000 x 0.0435 x 0.25 = $10.87

Therefore, the couple will owe approximately $10.87 in interest to the bank.