Question

In order to start a small business, a student takes out a simple interest loan for $3000.00 for 9 months at a rate of 11.75%. a. How much interest must the student pay? b. Find the future value of the loan. a. The amount of interest is $ . (Round to the nearest cent as needed.) b. The future value is $ (Round to the nearest cent as needed.)

Answer 1

Answer: (a) $264.375 ⇒ Amount of Interest

(b) Future Value = $3264.375

Explanation:

(a) Principal amount = $3000

Time period = 9 months

Interest rate = 11.75%

Simple interest(SI) = principal amount × rate of interest (i) × time period

= 3000 ×
`(11.75)/(100)` ×
`(9)/(12)`

= 3000 × 0.1175 × 0.75

= $264.375 ⇒ Amount of Interest

(b) Future value of loan = principal amount + interest amount

= 3000 + 264.375

= 3264.375

Answer 2

student pay interest = $247.5

future value is $3247.5

Explanation:

Given data

principal = $3000

time period (t) = 9 months = 9/12 = 0.75 year

rate = 11.75 %

to find out

amount of interest and future value

Solution

first we calculate the future value by simple interest formula i.e.

future value = principal (1 + rate ×time ) ....................1

put all value rate, time principal in equation 1 we get future value

future value = principal (1 + rate ×time )

future value = 3000 (1 + 0.11 × 0.75 )

future value = $3247.5

student pay interest = future value - principal

student pay interest = $3247.5 - $3000

student pay interest = $247.5