A company has a 6-month loan for $1,000 at 10% interest. Determine the amount of interest the company will pay in the 6-month period using this equation: (number of months divided by 12) multiplied by (interest percentage multiplied by loan amount). Select one.

Answer 1

To calculate the amount of interest the company will pay on the loan, we can use the formula you provided:

$$\text{Interest}=\left(\frac{\text{number of months}}{12}\right)\times (\text{interest percentage}\times \text{loan amount})$$

Given:

• Number of months = 6
• Interest percentage = 10% (or 0.10 when expressed as a decimal)
• Loan amount = $1,000

Plugging in the values:

$$\text{Interest}=\left(\frac{6}{12}\right)\times (0.10\times 1000)$$

First, calculate $\frac{6}{12}$:

$$\frac{6}{12}=0.5$$

Next, calculate $0.10\times 1000$:

$$0.10\times 1000=100$$

Now, substitute these values back into the equation:

$$\text{Interest}=0.5\times 100=50$$

Thus, the company will pay $50 in interest over the 6-month period.