Simple interest is a method of calculating interest on an amount for n period of time with a rate of interest of r. The amount of monthly payments is $287.5.
<h3>What is simple interest?</h3>
Simple interest is a method of calculating interest on an amount for n period of time with a rate of interest of r. It is calculated with the help of the formula,
SI = (PRT)/100
where SI is the simple interest, P is the principal amount, R is the rate of interest, and T is the time period.
Given the following details about the simple interest loan as,
Principal amount, P = $3,000
Interest rate, r = 15%
Number of instalments = 12
Since there are 12 instalments each for a month, therefore, the time period for which the loan was there is 1 year.
Now, the interest for 1 year will be,
Interest amount = ($3,000 × 1 × 15)/100
= $450
Further, the total amount that is needed to be paid back is the sum of the principal amount and Interest amount.
Amount needed = $3,000 + $450
= $3,450
Moreover, there are 12 instalments, therefore, the number of monthly payments will be,
Monthly payment = $3,450/12 = $287.5
Hence, the amount of monthly payments is $287.5.
Learn more about Simple Interest here:
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