Question

Find the TOTAL amount owed on a loan of $2,500 for 18 months, with a simple interest rate of 12%

Answer 1

$2,950

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 12% into its decimal form:

12% ->
`(12)/(100)` -> 0.12

Next, we need to change the annual interest rate to 1.5 since 18 months is 1.5 years. Now plug in the values:

`A=2,500(1+(0.12)(1.5))`

`A=2,950`

The total amount owed after 18 months is $2,950