Question

You borrow &1,000 on a simple interest loan. You pay an annual rate of 3.5%. You will take 3 years to pay back the loan. How much interest will you pay?

Answer 1

Answer: You would pay $105 as interest.

Explanation:

We would apply the formula for determining simple interest which is expressed as

I = PRT/100

Where

I represents the amount of interest paid on the loan.

P represents the principal or amount taken as loan

R represents interest rate on the loan.

T represents the duration of the loan in years.

From the information given,

P = $1000

R = 3.5%

T = 3 years

Therefore,

I = (1000 × 3.5 × 3)/100 = 10500/100

I = $105