Question

A man borrowed ​$ 3700 from a bank for 6 months. A friend was cosigner of the

man​'s personal note. The bank collected 7 1/2% simple interest on the date of maturity.
​a) How much did the
man pay for the use of the​ money?
​b) Determine the amount
he repaid to the bank on the due date of the note.

Answer 1

a) To find out how much the man paid for the use of the money, we can use the simple interest formula:

I = Prt

Where:
I = interest
P = principal (the amount borrowed)
r = interest rate (as a decimal)
t = time (in years)

In this case, we have:
P = $3700
r = 7.5% = 0.075
t = 6 months = 0.5 years

Plugging in the values, we get:

I = $3700 x 0.075 x 0.5
I = $138.75

Therefore, the man paid $138.75 for the use of the money.

b) To determine the amount he repaid to the bank on the due date of the note, we need to add the interest to the principal:

Amount repaid = Principal + Interest
Amount repaid = $3700 + $138.75
Amount repaid = $3838.75

Therefore, the man repaid $3838.75 to the bank on the due date of the note.