Question

A.You need a simple interest bridge loan to cover the costs of buying a new home while waiting to close onyour old one. You need to finance $75,000 and bank will charge 9%. How much interest will you pay ifyou needed the loan for 5 months?Interest =$ _____(nearest $1)B.Your friend needs a loan of $3,900 for 3 months. You tell him for the simple interest loan service he needsto pay you back $3,948.75. What is the simple interest rate on your friendly loan? Round to the nearesttenth of percent, one decimal place in percent as needed.Interest Rate=_____%

Answer 1

A.

Given:

The principal amount, P=$75,000

The interest rate, r=9%

The time, t=5 months

To find the interest amount:

Using the simple interest formula,

`\begin{gathered} SI=(P* r* t)/(100) \\ =(75000*9*5)/(100*12) \\ =(750*3*5)/(4) \\ =2812.5 \end{gathered}`

Hence, the interest is $2813 (rounded to the nearest dollars).