Question

A student has received a $50,000 loan from a wealthy aunt in order to finance his 4 year college program. The terms are that the student repay his aunt at the end of 9 years with simple interest computed at the rate of 3 percent per year. Determine the interest which must be paid on the 9 year loan.

Answer 1

Given - Principal amount : $50,000

Time - 9 years

Rate - 3 Percent per year.

Find - Interest to be paid on the loan.

Solution - The interest that must be paid can be calculated by the formula - P*R*T/100. In the formula, P stands for principal, r stands for rate of interest and t refers to time.

Keeping the values in equation-

I = 50,000*3*9/100

I = $13,500

Hence, the interest that has to be paid on 9 year loan is $13,500.