Simple Interest Example Problem

On September 9, Enrique went to a Texas bank to borrow $3,200 at 11 2/3% interest. Enrique plans to repay the loan on January 7. Assume the loan is on ordinary interest (Generally, ordinary interest uses 360 days a year to calculate interest).

1. Calculate Simple Interest that Enrique will owe on January 7
2. Calculate the total amount Enrique must repay at maturity.




Accounting Answer:

1.
Simple Interest = Principal Amount * Period Interest Rate * Number of periods
I=3200*(35/3)%/100%)*(118/360)=$122.37.  

2. Pt = 3200 + 122.37 = $332237.


See also: How to Calculate Simple Interest