Question

sherry needs to borrow $6,200 to replace the air conditioner in her home. from her credit union, sherry obtains a 30 month loan with an annual simple interest rate of 5.75% use the formula I=Prt (time in years)

Answer 1

Simple Interest Equation (Principal + Interest)

A = P(1 + rt)

Where:

A = Total Accrued Amount (principal + interest)

P = Principal Amount

I = Interest Amount

r = Rate of Interest per year in decimal; r = R/100

R = Rate of Interest per year as a percent; R = r * 100

t = Time Period involved in months or years

Calculation:

First, converting R percent to r a decimal

r = R/100 = 5.75%/100 = 0.0575 per year.

Putting time into years for simplicity,

30 months / 12 months/year = 2.5 years.

Solving our equation:

A = 6200(1 + (0.0575 × 2.5)) = 7091.25

A = $7,091.25

The total amount accrued, principal plus interest, from simple interest on a principal of $6,200.00 at a rate of 5.75% per year for 2.5 years (30 months) is $7,091.25.