Question

Eugene Madison obtained a 3-month loan of $2000 at an annual interest rate of 7.6%. Find the simple interest Eugene owes on the loan

Answer 1

The following is the simple interest formula

$SI=P(rt)$

where,

SI=Simple interest

P=initial principal balance = $2000

r=annual interest rate = 7.6% = 0.076

t=time (in years) = 3/12

Therefore,

$SI=2000(0.076\cdot\frac{3}{12})$

solving

$SI=38$

Then, the simple interest is $38