Question

A friend lent 17,600 to Dawn W. Monroe, the owner of a comic book store. She repaid the loan at the end of 6 months at 7 1/2% simple interest. What total amount did Dawn pay her friend?

Answer 1

Given that the loan was paid using a simple interest model, then the total amount of interest paid was:
I=(PRT)/100
I=interest
P=principle=$17600
R=rate=7.5%
T=time=6/12=0.5 years
thus
I=(17600×7.5×0.5)/100
=$660
Thus the total amount that Dawn paid will be:
Total=Principle+Interest
=17600+660
=$18260

Answer 2

If the term of the loan issued to Dawn W. Monroe, the owner of the comic book store, was 6 months; then the amount paid by Dawn would be 18,920. Calculated as 17,600 times 107.5 percent. (100 percent being the loaned amount, 7.5 percent being the interest amount).