Question

Bob takes a loan of $7,000 on 5% interest rate for 5 months. How do you calculate the simple interest?

Answer 1

Simple Interest = $145.83

Explanation:

Here, loan (P)= $7,000, Rate of Interest (R) = 5% and

no. of years (T) = 5 months = 5/12 year.

We know, Simple Interest

(

I

)

=

P

R

T

100

So,

I

=

7

,

000

⋅

5

⋅

5

12

100

=

875

6

=

145.83