Simple Interest

$50,000 borrowed from a bank for a simple interest of 8% p.a. for three years. What is the amount of interest to be paid on loan at the end of three year ?

Solutions

Expert Solution

Here,

Principal Amount = $50,000

Rate of interest = 8%

Number of years = 3

Terms used in the formula

SI - Simple Interest

R - Rate of interest

T - Number of years

$ \begin{align}SI &= P \times R \times T\\ &= \$50,000 \times 0.08 \times \ 3\\ &= \$12,000 \end{align} $

Hence, the simple interest generated over these three years is $12,000

Interest paid on loan is $12,000

Vinay answered 2 years ago

Next > < Previous

Related Solutions

Simple Interest versus Compound Interest First City Bank pays 10% simple interest on its savings account...

Simple Interest versus Compound Interest First City Bank pays 10% simple interest on its savings account balances; whereas, Second City Bank pays 10% interest compounded annually. If you made $6,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 10 years; and, what is the amount for First City Bank? What is the simple interest amount for First City Bank; What is the amount of compound interest for...

1. Simple Interest versus Compound Interest First Tappan Bank pays 9 percent simple interest on its...

1. Simple Interest versus Compound Interest First Tappan Bank pays 9 percent simple interest on its savings account balances, whereas First Mullineaux Bank pays 9 percent interest compounded annually. If you made a $7,500 deposit in each bank, how much more money would you earn from your First Mullineaux Bank account at the end of 8 years? 2. Calculating Future Values For each of the following, compute the future value: Present Value Years Interest Rate Future Value $2,328 11 13%...

Calculate the simple interest. (6 marks) Principal Rate per Annum Time Simple Interest $1356.78 8% 6...

Calculate the simple interest. Principal Rate per Annum Time Simple Interest $1356.78 8% 6 years $685.43 9.25% 7 months $1595.85 7.75% 185 days Calculate the principal. Simple Interest Rate per Annum Time Principal $1275.00 8.5% 3 years $585.90 9.25% 5 months $210.75 8.75% 63 days Calculate the interest rate per annum correct to 1 decimal place. Principal Simple Interest Time Rate per Annum $10,563.77 $7394.64 7 years $6854.25 $433.53 11 months $450.00 $7.22 66 days Calculate the simple interest, then...

Question: How does compound interest differ from simple interest?

What is the total interest for a $1,500 1-year simple interest amortized loan at 6% interest,...

What is the total interest for a $1,500 1-year simple interest amortized loan at 6% interest, with monthly payments

You were offered the opportunity to purchase either a simple interest note or a simple discount...

You were offered the opportunity to purchase either a simple interest note or a simple discount note with the following terms: $37,172 at 10% for 6 months. a. Calculate the effective interest rate. (Do not round intermediate calculations. Round your final answer to the nearest tenth percent.) Effective interest rate % b. Based on the effective interest rate, which would you choose? simple interest note simple discount note

You were offered the opportunity to purchase either a simple interest note or a simple discount...

You were offered the opportunity to purchase either a simple interest note or a simple discount note with the following terms: $38,485 at 7% for 36 months. a. Calculate the effective interest rate

The use of compound interest for completed periods and simple interest for a final fractional period...

The use of compound interest for completed periods and simple interest for a final fractional period can be analyzed as follows. Consider the investment of 1 for n + k periods, where n is a non-negative integer and 0 < k < 1. Then, the use of interpolation between (1 + i)n and (1 + i)n+1, where n is a non-negative integer. To see this, we start with the linear interpolation (1 + i)n+k = (1 − k)(1 + i)n...

Explain the difference between simple interest and compound interest. Provide an example of each.

1. Compare the interest earned on $15,000 for 25 years at 7% simple interest with the...

1. Compare the interest earned on $15,000 for 25 years at 7% simple interest with the amount of interest earned if interest were compounded annually. 2. Bank A pays 6% simple interest on its savings account balances. Bank B pays 5.5% interest compounded annually. If you made a $10,000 deposit in each bank, which bank provides you more money at the end of 15 years? 3. You are considering investing $1,000 at an interest rate of 6.5% compounded annually for...

Subjects