Question

A.You need a simple interest bridge loan to cover the costs of buying a new home while waiting to close onyour old one. You need to finance $75,000 and bank will charge 9%. How much interest will you pay ifyou needed the loan for 5 months?Interest =$ _____(nearest $1)B.Your friend needs a loan of $3,900 for 3 months. You tell him for the simple interest loan service he needsto pay you back $3,948.75. What is the simple interest rate on your friendly loan? Round to the nearesttenth of percent, one decimal place in percent as needed.Interest Rate=_____%

Answer 1

A.

Given:

The principal amount, P=$75,000

The interest rate, r=9%

The time, t=5 months

To find the interest amount:

Using the simple interest formula,

$\begin{gathered} SI=\frac{P\times r\times t}{100} \\ =\frac{75000\times9\times5}{100\times12} \\ =\frac{750\times3\times5}{4} \\ =2812.5 \end{gathered}$

Hence, the interest is $2813 (rounded to the nearest dollars).