The student has to pay back $1240
Further explanation:
Simple interest is calculated on the principal amount. It can be applied only one or over a period of time. For example, if the interest is to be applied annually then it will be calculated each year on the starting principal amount.
Given
Amount = Principal amount = P_0 = $1000
Interest rate = r = 8%
time = t = 3 years
The formula for calculating interest is:
The interest for three years will be $240.
The amount to be paid back by the student is:
The student has to pay back $1240
Keywords: Simple interest, yearly interest
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