Interest and Loan Concepts
Unit 3 focuses on interest and loan concepts covered in your reading of Chapter 11: “Simple Interest and Simple Discounts.”
You must show your work at all times. The steps for solving each problem must be explained. Failure to do so could result in your submission being given a 0 grade. If you have any questions about how much work to show, please contact your instructor.
Assignments must be submitted as a Microsoft® Word® document and uploaded to the Dropbox for Unit 3. Type all answers directly in this Assignment below each question. All Assignments are due by Tuesday at 11:59 p.m. ET of the assigned unit.
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4. Email Your Instructor: Your instructor is only an email away; when you cannot make any more progress on a problem, reach out. Send your instructor the work you started and steps of the problem you have completed so far, and ask for help. Your instructor will respond within 24 hours.
Interest and Loan Concepts Assignment (Total 40 Points)
Question 1: (10 Points)
a) State the simple interest formula and explain how simple interest is calculated.
To calculate simple interest you will use the following formula.
I = PRT (I = Interest, P = principal, R = rate, and T = time
To find the interest you will first convert the rate to a decimal (E.g 3.5% = 0.035) and then you would replace the P with the amount of the loan, replace R with the rate converted to a decimal and replace the T will the duration of the loan (E.g 1yr, 2yrs etc..). Once the numbers are inputted you would multiple across to get the interest amount.
b) Calculate the simple interest for a loan for $39,545 for 3 1/2 years at 7.5% interest per year. Round to the nearest cent.
I = PRT
I = 39,545 (7.5%) (3.5) = 39,545 (0.075) (3.5) = 10,380.56
Thus, the interest on the loan is $10,380.56
c) How much is owed in total at the maturity date?