In order to start a small business, a student takes out a simple interest loan for 2000.00 for 3 months at a rate of 12.25%. How much interest must the student pay?

Question

asked Jun 12, 2023 183k views

1 Answer

Christoffer Reijer · Answer 1 · 2023-06-18T08:46:45+0000

The formula to calculate the simple interest is given to be:

where I is the simple interest, P is the principal, R is the rate, and T is the time in years.

From the question, we have the following parameters:

$\begin{gathered} P=2000 \\ R=12.25 \\ T=(3)/(12) \end{gathered}$

Therefore, the interest is calculated to be:

$\begin{gathered} I=(2000*12.25*3)/(100*12) \\ I=61.25 \end{gathered}$

The simple interest is 61.25.