Question

$10 000 is borrowed at 10.5% per annum interest. How much interest is owed at the end of the first 10 months?

Answer 1

Answer:

$875 is the interest owed at the end of the first 10 months

Step-by-step explanation:

In this question, we are to calculate how much interest is owed in the first ten months.

There are several routes to this but the one i will like to use is as follows.

we shall calculate the amount owed for a year, afterwards we did use this amount by 12 since there are 12 months in a year. Now we multiply whatever answer we have by 10 to get the amount owed in 10 months.

To calculate the interest, we use the simple interest formula.

Mathematically;

I = PRT/100

where P is the amount borrowed which is $10,000

R is the interest rate which is 10.5% per annum

T is the time which we agreed we would be using 1 year first.

I = (10,000 * 10.5 * 1)/100 = $1050

This is the amount in 12 months. In a single month, this will be 1050/12 = $87.5

This amount in 10 months will be 87.5 * 10 = $875