Question

You need a simple interest bridge loan to cover the costs of buying a new home while waiting to close on your old one. You need to finance $73,000 and bank will charge 6%. How much interest will you pay if you needed the loan for 9 months?Interest =$(nearest $1)

Answer 1

The problem says you need a simple interest bridge loan.

You need to finance $73,000.

The interest rate is 6% (0.06)

You need the loan for 9 months.

The formula for simple interest rate is the following:

`SI=P\cdot r\cdot t`

Where SI is the simple interest. P is the principal or money borrowed. r is the interest rate in decimal form. t is the time in years.

As you need the loan for 9 months, we need to convert it to years, as follows:

`9\text{months}\cdot\frac{1\text{year}}{12months}=0.75years`

Now, replace the known values and solve for SI:

`\begin{gathered} SI=73,000\cdot0.06\cdot0.75 \\ SI=3,285 \end{gathered}`

You will pay $3,285 interest for the loan.