Question

His friend Thomas grants him a loan of $ 5000, instructing him to charge 10% periodic interest for forty (40) months using the simple interest method. Calculate the interest and the total pay? a) $ 1,800, interest, total payable $ 6800 b) $ 1,667 interest, total payable $ 3,333 c) $ 1,500 interest, total to pay $ 6,500 d) $ 1,667 interest, total payable $ 6,667 e) _______________________________

Answer 1

Ans:- In this question, we need to find the total interest and the total pay pay using the simple interest method.

Per year Interest charge will be ( Principle * Rate * Time) / 100 = ($5000 * 10 * 1 ) /100 = $500.

Per month Interest will be $500 / 12 = $41.67

Total Interest for 40 months will be $42.67 * 40 = $1667 (approx).

Now the Total pay will be Principal + Interest = $5000 + $1667 = $6,667 (approx)

Therefore option (d) is the right answer i.e $1,667 interest and $6,667 total pay.