Problema Solution
You decide to take out a simple interest loan for $5000, at 7% yearly interest on November 27th. If you repay the loan on December 31st (at the end of the current year)
a) How much do you pay total when you pay off the loan?
b) How much interest do you pay?
Answer provided by our tutors
P = $5,000
R = 7% or 0.07
T = 3 + 31 = 34 days the number of days between the November 27th and December 31st
b) How much interest do you pay?
I = P*R*(T in years)
I = 5000*0.07*34/365
I = $32.603
a) How much do you pay total when you pay off the loan?
P + I = 5,000 + 32.603 = $5.032.603