Question

If you take out a loan for $550 at 7.2% simple interest and make no payments for 6 months how much do you owe in total

Answer 1

$569.80

Explanation:

We can use the simple interest formula for this:

`A = P (1 + rt)`

P = initial balance

r = annual interest rate

t = time

First, change 7.2% into its decimal form:

7.2% ->
`(7.2)/(100)` -> 0.072

Next, since we are calculating for 6 months (1/2 of a year), the annual interest rate will be 0.5. Now, plug in the values:

`A=550(1+(0.072)(0.5))`

`A=569.80`

The total amount owed in 6 months is $569.80