If you borrow $500 at 16% simple interest for 8 months, how much do you have to repay?

Answer 1

To calculate the amount to be repaid, you need to find the interest charged and add it to the principal amount borrowed.

First, calculate the interest charged using the formula:

Interest = Principal * Rate * Time

In this case, Principal = $500, Rate = 16% (in decimal form this is 0.16), and Time = 8 months. Note that the time should be in years for the formula.

Converting time from months to years: 8 months ÷ 12 = 0.67 years

Now, calculate the interest:

Interest = $500 * 0.16 * 0.67 = $53.33

Next, add the interest to the principal amount to find the total amount to be repaid:

Total amount to repay = Principal + Interest = $500 + $53.33 = $553.33

Therefore, you have to repay $553.33.