Question

You applied for k40 000.00 for a bank loan and you where given a flat rate interest of 9% for 2½ years. What is the amount he will pay the bank?

Answer 1

The formula to calculate the amount of loan with flat rate interest is:

Amount = Principal + (Principal x Rate x Time)

Where,

Principal = the amount of loan

Rate = the interest rate per year

Time = the time period in years

Given,

Principal = K40,000.00

Rate = 9% per year

Time = 2.5 years

Substituting the values in the formula, we get:

Amount = K40,000.00 + (K40,000.00 x 0.09 x 2.5)

Amount = K40,000.00 + K9,000.00

Amount = K49,000.00

Therefore, the amount he will pay the bank is K49,000.00.