Question

An investment is 3300 is made for 4 months at an annual simple interest rate of 3.75% determine the following values P= $3300 R=0.0375T=4/12 Find the amount of interest earned on this loan I=??Calculate the future value of the loan

Answer 1

We are given the following information;

An investment of $3300 at the rate of 3.75% per annum simple interest for 4 months.

The formula for simple interest is;

`I=P* R* T`

Where the variables are;

`\begin{gathered} I=\text{interest} \\ \text{ P=Principal (3300)} \\ R=\text{Rate (3.75\%, OR }0.0375) \\ T=\text{Time in years (OR }(4)/(12)yrs) \end{gathered}`

We substitute the given values and we have;

`\begin{gathered} I=3300*0.0375*(4)/(12) \\ I=(3300*0.0375*4)/(12) \end{gathered}`

We now simplify and the answer becomes;

`I=41.25`

The amount of interest earned on this loan is $41.25.

The future value would be the total amount after 4 months and that would be;

`\begin{gathered} FV=\text{ Principal}+Interest \\ FV=3300+41.25 \\ FV=3,341.25 \end{gathered}`

ANSWER:

Interest = $41.25

Future Valu = $3,341.25