Finite Mathematics : Simple Interest

Study concepts, example questions & explanations for Finite Mathematics

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Example Questions

Example Question #1 : 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:

\(\displaystyle \$2150\)

\(\displaystyle \$750\)

\(\displaystyle \$576\)

\(\displaystyle \$702\)

\(\displaystyle \$648\)

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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