Larry borrows $1300 at 5% simple interest per month. When
Larry pays the loan back 3 years later, what is the total amount that Larry ends up repaying?
i=2340
p=1300
R=0.05
T= 36months
Fred borrows $40 at 0.8% simple interest per month. When Fred pays the loan back 2 years later, how much interest does
I=76.8
P=40
R=0.08
T=24
Craig borrows $1000 at 9% simple interest per year. When Craig pays the loan back 11 years later, what is the total amount that Craig ends up repaying?
1000x0.09x11=990
#1. You got the interest right, but Larry has to pay that as well as the original principal.
#2. NO. As I told you, R = 0.8%, not 8%.
R=0.008
#3. same as #1. Don't just figure the interest in what has to be repaid.
Just having a formula doesn't mean it answers the question. Your real formula for #1 and #3 is A = PRT+P or P(1+RT)
In the 1st and 3rd, it asked for the TOTAL amount to be paid back
your calculations of interests are correct, but you would have to add the
original amount of the loan in the amount to be paid back.
e.g. in the first one
amount amount = 2340+1300 = 3640
btw, that would be an interest rate of 60%, which in most countries would be illegal, and in the middle ages would have had you beheaded!
Do the same for the third, the interest calculation is correct
for the 2nd, you made an error in the decimal placement
0.8% = .008, you must have used .08
so the interest is 7.68
To calculate the total amount that Larry ends up repaying, we need to use the formula for calculating simple interest:
A = P(1 + RT)
Where:
A = Total amount repaid
P = Principal amount (original loan amount)
R = Interest rate per period (in this case, monthly rate)
T = Number of periods (in this case, number of months)
Given values:
P = $1300
R = 0.05 (5% per month)
T = 36 months
To calculate the total amount repaid:
A = 1300(1 + 0.05 * 36)
A = 1300(1 + 1.8)
A = 1300(2.8)
A = $3640
Therefore, Larry ends up repaying a total of $3640.