Compute the specified quantity.You take out a 5 month, $1,000 loan at 8% annual simple interest. How much would you owe at the end of the 5 months (in dollars)? (Round your answer to the nearest cent.)
Question
Compute the specified quantity.You take out a 5 month, $1,000 loan at 8% annual simple interest. How much would you owe at the end of the 5 months (in dollars)? (Round your answer to the nearest cent.)
Solution
To calculate the total amount you would owe at the end of the 5 months, you first need to calculate the interest on the loan.
Step 1: Convert the annual interest rate to a decimal. 8% = 0.08
Step 2: Calculate the interest for the period of the loan. Interest = Principal amount * Rate
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