Question

Levada borrows $30,900 from her bank to open a florist shop. She agrees to repay the money in 18 months with simple annual interest of 5.5%

Answer 1

Levada borrows $30,900 from her bank to open a florist shop at rate of 0.98% per month.

How to calculate simple interest amount?

If the initial amount (also called as principal amount) is P, and the interest rate is R% annually, and it is left for T years for that simple interest, then the interest amount earned is given by:

$I = \dfrac{P \times R \times T}{100}$

It is given that Levada borrows $30,900 from her bank to open a florist shop. She agrees to repay the money in 18 months with simple annual interest of 5.5%.

P = $30,900

T = 18 months

Interest  = 5.5%

Interest rate =  P×R×T

5.5 = 30,900 × R × 18

R = 0.000988

Or, R = 0.98% per month.

The complete question is

"a) How much must she pay the bank in 18 months?"

Learn more about simple interest here:

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