Fredrick has a loan of $55,350. This loan has a simple interest rate of 3% per year. What is the amount of interest that Fredrick will be charged on this loan at the end of one year?
Question
Fredrick has a loan of $55,350. This loan has a simple interest rate of 3% per year. What is the amount of interest that Fredrick will be charged on this loan at the end of one year?
Solution
To calculate the amount of interest Frederick will be charged at the end of one year, you need to use the formula for simple interest which is:
Interest = Principal x Rate x Time
In this case:
Principal (P) = $55,350 Rate (R) = 3% per year = 0.03 (in decimal form) Time (T) = 1 year
Substitute these values into the formula:
Interest = $55,350 x 0.03 x 1
Interest = $1,660.50
So, Frederick will be charged $1,660.50 in interest at the end of one year.
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