Finite Mathematics : Simple Interest

Study concepts, example questions & explanations for Finite Mathematics

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Example Questions

Example Question #2 : Finite Mathematics

What is the total interest made after 4 years on a simple interest loan that accumulates 13% each year and has original amount was $1350.

Possible Answers:

\displaystyle \$702

\displaystyle \$648

\displaystyle \$2150

\displaystyle \$750

\displaystyle \$576

Correct answer:

\displaystyle \$702

Explanation:

To solve this problem, first recall the formula to calculate simple interest.

\displaystyle I=A_0\times r\times t

where

\displaystyle \\A_0=\text{initial amount} \\r=\text{rate} \\t=\text{time} \\I=\text{interest accumulated}

From the question it's known that,

\displaystyle \\A_0=1350\\r=0.13 \\t=4

Thus the equation becomes,

\displaystyle \\I=1350\times 0.13\times 4 \\I=702

Therefore $702 in interested accumulated after four years.

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