Question

You borrow $500 from a family member and agree to pay it back in six months....

You borrow $500 from a family member and agree to pay it back in six months. Because you are part of the family, you are only being charged simple interest at the rate of 6% per month. How much (Principal + interest) will you owe after six months?
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Answer #1

Principal,

Interest rate, (per month)

Time period, (months)

Simple interest is calculated using the formula,

(Please note that the units of interest rate and time period should not have any conflict. Here both interest and time period is defined in terms of month. Alternatively, we could use years or days to define interest rate and time period)

Therefore, the total amount to be paid back = 500 +180 = 680

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