Question

(a) Calculate the simple interest collected by a bank if $1500 is loaned for 3 years at 8% per annum.

(b) What amount of money did the borrower actually pay the bank?
(c) What amount of money was paid monthly?

Answer 1

Explanation:

(a)Given:

Principal Amount=$1500

Time = 3 years

Rate of Interest = 8% per annum

Find:

Simple Interest=?

According to the formula of simple interest

Simple Interest=Principal x Time x Rate of Interest

i.e., SI=PRT

SI= 1500 X 3 X 8/100

SI= $360

Therefore, the simple interest for the principal amount of the loan $1500 in 3 years at a rate of 8% per annum will be $360.

(b) According to the formula:

Total Amount= Principal Amount + Simple Interest

i.e., Total Amount = $1500+$360

Total Amount = $1860

Therefore, the loan amount the borrower will pay the bank is $1860.