SOLUTION: Faye has a home equity loan of $70,000. The bank charges Faye 6% per annum simple interest. What is the interest charge on Faye's loan after one month?

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Question 68410: Faye has a home equity loan of $70,000. The bank charges Faye 6% per annum simple interest. What is the interest charge on Faye's loan after one month?
Answer by rmromero(383) About Me  (Show Source):
You can put this solution on YOUR website!
What is ask in the problem?
--> What is the interest on faye's loan after one month



Given:
--> Faye has a loan of $70,000.
--> Bank charges her 6% per annum simple interest



Solution:
Formula for Simple interest ::>> highlight+%28I+=+P%28R%29%28t%29%29+
Where P = Principal / Loan
R = Rate of the bank (Charge)
t = time, Note 1 year = 12 months


I = PRt
= 70,000 (0.06) 1 , we use 1 because the rate is per annum (per year)
= 4, 200 ---> this is the interest after one year.


The problem is what is the interest after one month? Since 1 year = 12 months, we will simply divide the interest in a year by 12


+I=%284200%29%2F12


I = $ 350 this is the interest of faye's loan after a month.