Question

Henry borrowed $770 from his friend at 6.875% simple annual interest for 8 months. What is the total amount that Henry will repay? Round your answer to the nearest cent.
$35.29
$805.29
$805.30
$822.93
$822.97
None of the above.

Answer 1

The total amount to be repaid is equal to $949.66

Step-by-step explanation:

Simple interest is a type of interest that is usually applied on short term loans, where when a payment is made towards this kind of interest the payment first goes towards monthly interest, and then the remainder is reverted towards the principal.

FORMULA FOR CALCULATING SIMPLE INTEREST =

Here principal = $922

        interest rate = 6%

        time period = 6 months (when made per annum it will be 6/12)

SIMPLE INTEREST IS EQUAL TO $27.66

The total amount that is to be repaid is equal to

  PRINCIPAL + SIMPLE INTEREST

= $922 + $27.66

= $949.66