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1. Lina wants to remodel her kitchen. Her contractor has quoted her $2,500 for the
project. Lina will take out a home improvement loan from her bank. The loan has
a two percent monthly, simple interest rate. Her minimum payments are $250.
How long will it take for her to pay off the loan.

Sagot :

Lanuelidn

It will take Lina 0.42 years to pay off the loan.

Given the following data:

  • Principal = $2,500
  • Interest rate = 2% monthly.
  • Simple interest = $250

To determine how long (time) it will take for Lina to pay off the loan:

First of all, we would calculate the interest rate for a year.

1 year = 12 months.

Interest rate = [tex]2 \times 12 = 24[/tex]

Mathematically, simple interest is given by the formula:

[tex]S.I = \frac{PRT}{100}[/tex]

Where:

  • S.I is the simple interest.
  • P is the principal amount.
  • R is the interest rate.
  • T is the time measured in years.

Making T the subject of formula, we have:

[tex]T = \frac{100S.I}{PR}\\\\T = \frac{100 \times 250}{2500 \times 24}\\\\T = \frac{25000}{60000}[/tex]

Time, T = 0.42 years.

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