Question

A physician borrowed $100,000 from credit union for 9 months at annual interest rate of 4%. What is the simple interest due on the loan?

Answer 1

Givens.

• The amount borrowed was $100,000.

,

• The time elapsed is 9 months.

,

• The annual interest rate of 4%.

The simple interest formula is

$I=PRT$

Where P = 100,000, R = 0.04, and T = 9/12.

$\begin{gathered} I=100,000\cdot0.04\cdot\frac{9}{12} \\ I=3,000 \end{gathered}$

Therefore, the simple interest is $3,000.