Simple Interest

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Finite Mathematics › Simple Interest

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What is the total interest made after 4 years on a simple interest loan that accumulates 13% each year and has original amount was $1350.

To solve this problem, first recall the formula to calculate simple interest.

$I=A_0\times r\times t$

where

$\A_0=\text{initial amount} \r=\text{rate} \t=\text{time} \I=\text{interest accumulated}$

From the question it's known that,

$\A_0=1350\r=0.13 \t=4$

Thus the equation becomes,

$\I=1350\times 0.13\times 4 \I=702$

Therefore $702 in interested accumulated after four years.