The calculated interest for the simple interest loan is $300, resulting in a future value of $5300. The student is required to pay $300 in interest, making the total amount $5300.
To calculate the interest for a simple interest loan, you can use the formula:
Interest = P * R * T
where:
P is the principal amount (the initial loan amount),
R is the interest rate per period, and
T is the time the money is borrowed for in years.
Given that:
Principal (P) = $5000.00
Interest rate per period (R) = 12.00% or 0.12
Time (T) = 6 months or 0.5 years
a. Calculate the interest:
Interest = 5000 * 0.12 * 0.5
Interest = $300
So, the student must pay $300 in interest.
b. Find the future value of the loan:
The future value (FV) of a simple interest loan can be calculated using the formula:
FV = P + Interest
FV = 5000 + 300
FV = $5300
The future value of the loan is $5300.