6.3 Simple Interest

Calculate the simple interest to be paid on a loan with the given principal, annual percentage rate, and number of years. Then, calculate the loan payoff amount.

1. Principal $P$ = $4,000, annual interest rate $r$ = 5.5%, and number of years $t$ = 4
2. Principal $P$ = $14,800, annual interest rate $r$ = 7.9%, and number of years $t$ = 7

Riley runs an auto repair shop, and needs to purchase a new brake lathe, which costs $11,995. She takes out a two-year, simple interest loan at an annual interest rate of 14.9%. How much interest will she pay and how much total will she repay on the loan?

Abeje needs a loan to purchase equipment for the gym she is going to open. She visits the bank and secures a 4-month loan of $20,000. Her annual percentage rate is 6.75%. How much interest will Abeje pay and what is her loan payoff amount?

David plans to move his family from Raleigh, North Carolina to Tempe, Arizona. His company will reimburse (pay after the move) David for the move. David does research and determines that movers will cost $5,600 to move his family’s belongings to Tempe. He takes out a simple interest, 45-day loan at 11.75% interest to pay this cost. How much interest will be paid on this 45-day loan, and what is Da…

In the following, determine how much interest was earned on the investment and the future value of the investment, if the investment yields simple interest.

1. Principal is $1,000, annual interest rate is 2.01%, and time is 5 years
2. Principal is $5,000, annual interest rate is 1.85%, and time is 30 years
3. Principal is $10,000, annual interest rate is 1.25%, and time is 18 months
4. Principal is $7,000, a…

Jonas deposits $2,500 in a CD bearing 3.25% simple interest for a term of 3 years. When he redeems his CD at the end of the 3 years, how much will he receive?

1. A simple interest loan for $6,500 is taken out at 12.6% annual percentage rate. A partial payment is made 45 days into the loan period. How much of the partial payment will be for interest?
2. A simple interest loan for $13,700 is taken out at 6.55% annual interest rate. A partial payment is to be made after 60 days. How much of the partial payment will be for interest?

1. A simple interest loan for $45,500 is taken out at 11.8% annual percentage rate. A partial payment of $20,000 is made 50 days into the loan period. After this payment, what will the remaining balance of the loan be?
2. A simple interest loan for $150,000 is taken out at 5.85% annual percentage rate. A partial payment of $50,000 is made 70 days into the loan period. After this payment, what will the…

Laura takes out an $18,400 loan for 120 days at 17.9% simple interest. She makes a partial payment of $7,500 after 45 days. What is her payoff amount at the end of the loan?

Desiree buys a new car, by taking a loan out from her credit union. The balance of her loan is $27,845.00. The annual interest rate that Desiree will pay is 7.3%. She plans to pay this off over 4 years. How much will Desiree’s monthly payment be?

Compute the present value of the investment described. Interpret the result.

1. $F V$ = $10,000, $t$ = 15 years, annual simple interest rate of 5.5%
2. $F V$ = $150,000, $t$ = 20 years, annual simple interest rate of 6.25%
3. $F V$ = $250,000, $t$ = 486 months, annual simple interest rate of 4.75%

Beatriz will invest some money in a CD that yields 3.99% simple interest when invested for 30 years. How much must Beatriz invest so that after those 30 years, her CD is worth $300,000?