Question

If a loan of 1,500 at 4% is paid off in 90 days what is the interest

Answer 1

Answer:

Compound interest =$14.58

Simple Interest=$14.79

Step-by-step explanation:

Let's assume the interest rate charged on the loan was simple in nature.

-Simple interest is calculated using the formula:

$I=PRT,\\\\=1500\times 0.04\times \frac{90}{365}\\\\=14.79$

Hence, the simple interest on the loan was $14.79

#If the interest is compound in nature with just one compounding per year:

$A=P(1+i)^n\\\\I=A-P\\\\I=1500(1.04)^{90/365}-1500\\\\=14.58$

Hence, the compound interest charged on the loan is $14.58