Question

your family plans to start a small business in your neighborhood. your father borrows $10,000 from the bank at an annual interest rate of 8% rate for 36 months. what is the amount of interest he will pay on this loan?

Explanation:

Step1: Identify the formula for simple interest

The formula for simple interest is $I = P \times r \times t$, where $I$ is the interest, $P$ is the principal amount, $r$ is the annual interest rate (in decimal), and $t$ is the time in years.

Step2: Convert the time to years

The loan is for 36 months. Since there are 12 months in a year, $t=\frac{36}{12} = 3$ years.

Step3: Convert the interest rate to decimal

The annual interest rate is 8%, so $r=\frac{8}{100}=0.08$.

Step4: Substitute the values into the formula

We know that $P = 10000$, $r = 0.08$, and $t = 3$. Substituting these into the formula $I = P \times r \times t$, we get $I=10000\times0.08\times3$.

Step5: Calculate the interest

First, calculate $10000\times0.08 = 800$. Then, multiply this result by 3: $800\times3 = 2400$.

Answer:

The amount of interest he will pay is $\$2400$.