Question

Sonia took a loan of $10 000 from ABC bank tob pay for a renovation at home. The bank offered her a period of 30 months at a rate of 10.5%. to repay the loan:

a) Calculate the Simple Interest she would pay in 30 months.

b) Calculate the Total amount Sonia would have to repay the bank.

Answer 1

a. Simple interest, S.I = $2,625

b. Total amount = $12,625

Explanation:

Given the following data;

Principal = $10,000

Interest rate = 10.5%

Time = 30 months to years = 2.5 years

a. To find the simple interest;

Mathematically, simple interest is calculated using this formula;

`S.I = \frac {PRT}{100}`

Where;

• S.I is simple interest.
• P is the principal.
• R is the interest rate.
• T is the time.

Substituting into the formula, we have;

`S.I = \frac {10000*10.5*2.5}{100}`

`S.I = \frac {262500}{100}`

Simple interest, S.I = $2,625

b. To calculate the total amount Sonia would have to repay the bank;

Total amount = simple interest + principal

Total amount = 2625 + 10000

Total amount = $12,625