Question

A student takes out an emergency loan for tuition, books, and supplies. The loan is for $900 with an interest rate of 8%. How much is does the season pay if the loan is paid back in 60 days?

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Answer 1

$911.84

Explanation:

Formula

`\sf A=P\left(1+(rt)/(n)\right)`

where:

• A = amount
• P = principal
• r = interest rate (decimal form)
• t = term
• n = number of units of term per year

Given:

• P = $900
• r = 8% = 0.08
• t = 60
• n = 365

`\implies \sf A=900\left(1+(0.08 * 60)/(365)\right)`

`\implies \sf A= \$911.84\: \textsf{(nearest cent)}`

Answer 2

$912

simple interest = Principal * Rate * Time (in years)

Here given:

• principal: $900

• rate: 8%

• time: 60 days = 60/360 = 1/6 years [ 1 years = 360 days ]

So, simple interest:

• 900 * 8% * 1/6

• 900 * 8/100 * 1/6

• $12

Pays back: $900 + $12 = $912 back.