Problema Solution
Marcia Rodger borrowed $3,500 from Valley Bank at a rate of 9%. The date of the loan was October 10. Marcia hoped to repay the loan by February 10. Assume the loan is based on ordinary interest. What will the interest cost be? How much will Marcia repay on February 10? What would the payback be if exact interest was used?
Answer provided by our tutors
9% simple interest of $3,500 is 0.09*3,500 = $315 is the amount of interest paid each month.
From October 10 till February 10 there are 4 month thus the total interest is:
4*315 = $1,260
And Marcia would have to repay 3,500 + 1,260 = $4,760.