Question

You take out a simple interest loan for $ 922 to pay for tuition. If the annual interest rate is 6 % and the loan must be repaid in 6 months, find the amount that you, the borrower, will have to repay. Round your answer to the nearest cent.

Answer 1

Answer:

The total amount to be repaid is equal to $949.66

Step-by-step explanation:

Simple interest is a type of interest which is usually applied on short term loans, where when a payment is made towards this kind of interest the payment first goes towards monthly interest and then the remainder is reverted towards the principal.

FORMULA FOR CALCULATING SIMPLE INTEREST =

$\frac{PRINCIPAL \times RATE OF INTEREST \times TIME PERIOD}{100}$

Here principal = $922

         interest rate = 6%

         time period = 6 months (when made per annum it will be 6/12)

$\frac{\ 922 \times 6 \times 1}{100\times 2}$

SIMPLE INTEREST IS EQUAL TO $27.66

The total amount that is to be repaid is equal to

   PRINCIPAL + SIMPLE INTEREST

= $922 + $27.66

= $949.66