Question

A company offering short term loans agrees to lend Nick $1,200. The amount (plus interest) is repayable in one year, and the interest rate is 12% per month. What is the total amount that must be repaid?

Answer 1

$2,928 in 1 year

Explanation:

Amount lent = $1,200

Monthly interest rate = 12%

Period = 12 months

Interest accrued = Amount lent * Monthly interest rate * Period

Interest accrued = $1,200 * 12% * 12

Interest accrued = $1,200 * 1.44

Interest accrued = $1,728

Amount repaid = Amount lent + Interest accrued

Amount repaid = $1,200 + $1,728

Amount repaid = $2,928