
Home > MC2 > Chapter 8 > Lesson 8.2.6 > Problem 8-86
8-86.
First calculate how much money the Jones need to borrow.
$40,000 − $23,000 = $17,000
Calculate the amount of interest that is added per month.
$17,000(0.02) = $340
Since the Jones can pay off the loan in 6 months, multiply the amount of interest added per month by 6.
$340(6) = $2,040
Finally, add that amount to the original to find the amount of money the Jones need to pay.
$17,000 + $2,040 = $19,040
Do you see how the simple interest formula was used?
I = (17,000)(0.02)(6)