The total amount Ernest owes the bank after 9 months is $1,225.00
How many months of interest would be paid?
The fact the loan was taken for nine months means that the borrower, Ernest needs to pay interest for nine months, in other words, we would time-apportion the annual interest of 30% to determine the 9-month interest as shown below:
9-month interest rate=30%*9/12
9-month interest rate=22.50%
The amount Ernest is owing the bank is the principal borrowed plus the interest for 9 months as computed below:
total amount owed after 9 months=$1000*(1+22.50%)
total amount owed after 9 months=$1000*1.2250
total amount owed after 9 months=$1,225.00
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