Sonia took a loan of $10 000 from ABC bank tob pay for a renovation at home. The bank offered her a period of 30 months at a rate of 10.5%.

Question

Sonia took a loan of $10 000 from ABC bank tob pay for a renovation at home. The bank offered her a period of 30 months at a rate of 10.5%. to repay the loan:

a) Calculate the Simple Interest she would pay in 30 months.

b) Calculate the Total amount Sonia would have to repay the bank.

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Maris 5 months 2021-08-15T13:26:51+00:00 1 Answers 11 views 0

Answers ( )

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    2021-08-15T13:28:49+00:00

    Answer:

    a. Simple interest, S.I = $2,625

    b. Total amount = $12,625

    Step-by-step explanation:

    Given the following data;

    Principal = $10,000

    Interest rate = 10.5%

    Time = 30 months to years = 2.5 years

    a. To find the simple interest;

    Mathematically, simple interest is calculated using this formula;

     S.I = \frac {PRT}{100}

    Where;

    • S.I is simple interest.
    • P is the principal.
    • R is the interest rate.
    • T is the time.

    Substituting into the formula, we have;

     S.I = \frac {10000*10.5*2.5}{100}

     S.I = \frac {262500}{100}

    Simple interest, S.I = $2,625

    b. To calculate the total amount Sonia would have to repay the bank;

    Total amount = simple interest + principal

    Total amount = 2625 + 10000

    Total amount = $12,625

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