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:

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

Given:

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

Plugging in the values:

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

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.