Final answer:
To find the total repayment amount of an $8,000 loan at 7% annual simple interest over 2 months, we calculate the interest using the formula I = PRT, which gives us $93.34. Adding this to the principal, the total repayment amount is $8,093.34.
Step-by-step explanation:
To calculate the total amount you must repay at the end of 2 months for an $8,000 loan at 7% annual simple interest, we first calculate the interest and then add it to the principal amount.
Simple interest is calculated using the formula:
I = PRT,
where I is the interest, P is the principal amount, R is the rate of interest (as a decimal), and T is the time period in years. Here:
- P = $8,000,
- R = 7% per annum or 0.07,
- T = 2 months, which is ⅖ or ~0.1667 years (since 1 year = 12 months).
Plugging the values into the formula:
I = $8,000 * 0.07 * 0.1667 = $93.34.
Therefore, the total interest payable over 2 months is approximately $93.34. Now we add this interest to the original loan amount to find the total repayment amount:
Total Repayment = Principal + Interest
Total Repayment = $8,000 + $93.34 = $8,093.34.
So, at the end of 2 months, you must repay $8,093.34.