Question

You need a simple interest bridge loan to cover the costs of buying a new home while waiting to close on your old one. You need to finance $78,000 and bank will charge 9%. How much interest will you pay if you needed the loan for 2 months?Interest =$____(nearest $1)

Answer 1

Answer:

Explanation:

Parameters:

Principal, P = $78,000

Interest rate, R = 9%

Time, T = 2 months OR 2/12 = 1/6 years

Interest = ?

The formula for simple interest is:

I = PRT/100

$\begin{gathered} I=\frac{78000\times9\times\frac{1}{6}}{100} \\ \\ =\frac{78000\times9}{100\times6} \\ \\ =\frac{702000}{600}=1170 \end{gathered}$