Question

On March 15th Ron went to the bank to borrow $3,000 at 8.5% interest. Ron plans to repay the loan on July 1st. Assume ordinary interest. How much will Ron repay?

Answer 1

March 15th to July 1st, let it be:

3.5 months

8.5% interest for 12 months, so for 1 month it will be:

8.5%/12 = 0.7083% per month

In 3.5 months, the interest will be:

0.7083 * 3.5 = 2.4792%

Rounded and in decimal, it is 0.0248

Hence,

Interest Payabel = 0.0248 * 3000 = $74.4

Total Payable = 3000 + 74.4 = $3074.40est will be: