Question

In order to start a small business, a student takes out a simple interest loan for $6000 for 3 months at a rate of 6.25%. How much interest must the student pay?

Answer 1

The student must pay back `$9375` interest to the bank.

Explanation:

`I = P xx R xx T`

If you are unfamiliar with this equation,

`"Interest" = "Price" xx "Rate (as a decimal)" xx "Time (in years)"`

`I = 6000 xx 6.25 xx 0.25`

`I = $9375`

`therefore` The student must pay back `$9375` interest to the bank.