josh borrows 8000 from the bank to study college, the bank charges 15% simple interest over 5 years. how much does josh owes in interest?
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Respuesta:
The simplest type of interest is called, appropriately, “simple interest.” If you were to loan a friend $1000 to start a business and you both agreed that in one year, the friend would repay you $1060, you would earn $60 interest on that investment.
You would earn $60 simple interest. Simple interest is calculated as a percentage of the initial amount borrowed and does not include any additional earnings.
The percentage of the original loan amount that is paid as simple interest is called the interest rate. In our example, the interest rate on a $1000 loan that requires a $60 interest payment in one year is:
The simple interest rate on this loan would be 6%.
Interest Rate = The amount earned on an investment or charged on a loan (% of the principal)
Principal = The original amount of money borrowed for a loan or placed into an investment