Question

Dan borrowed $1,250.00 from his brother who is charging him 5% simple interest. If Dan pays his brother back in 18 months, how much does he have to pay back including the interest?

Answer 1

Given that Dan borrowed $1,250.00 from his brother who is charging him 5% simple interest. Now we have to find the total payment that he needs to payback including interest. Hence we can use simple interest formula

I=PRT

Where P= 1250

R=5% =0.05

T=18 months = 18/12 = 1.5 years

Now plug these values into above formula

I=PRT=1250*0.05*1.5=93.75

So total payment including interest = 1250+93.75=1343.75

Hence final answer is $1343.75.