Question

A friend asks to borrow $250 for 120 days and agrees to pay 2.5% simple interest every 30 days. How much interest will you earn

Answer 1

Answer:

We will $ 6.25 of interest every 30 days.

Step-by-step explanation:

Please notice that a month equals 30 days and that earning due to interests will be only effective after each 30th day. The simple interest formula is defined by the following formula:

$I = \frac{C\cdot r\cdot t}{100}$ (1)

Where:

$C$ - Borrowed money, measured in monetary units.

$r$ - Simple interest rate, measured in percentage.

$t$ - Number of periods, measured in months.

$I$ - Interested gain due to borrowed money, meausred in monetary units.

If we know that $C = 250$, $r = 2.5$ and $t = 1$, then the interest earned is:

$I = \frac{(250)\cdot (2.5)\cdot (1)}{100}$

$I = 6.25$

We will $ 6.25 of interest every 30 days.