Math problem on bank interest

Question

Mr. Jones borrowed $3,680 from Scotiabank for 6 months at 8.75% per annum. Find:
(a) The sum of money Mr. Jones had to pay the bank as simple interest.
(b) The total amount of money repaid to the bank.
(c) The amount of each monthly payment

Answer 1

The standard interest equation is A=P(1 + r/n)^nt, where A is final amount, P is the principle, r is the rate, n is the number of times it is compounded and t is the time in years.

 

In this case P=3680, r = .0875, n=1 (simple interest) and t=.5 (6/12)

 

We calculate the total payback as 3680(1.0875)^.5 = 3837.62.

 

a.  Interest = 3837.62 - 3680 = 157.62

 

b.  Total is 3837.62

 

c.  Monthly is 3837.62 / 6 = 639.60