Question

PROBLEMS 1. Pat sold Mike a used automobile for $3000. Mike paid $500 as a Mike paid $500 as a down payment and gave at three personal notes for the remainder due. The principal of each note was $1000, $750, and $750. The $1000 note was due 1 year after the purchas ne 1 year after the purchase, the second vas que 2 years after the purchase, and the third note was due 3 years after the purchase. The annual simple interest agreed to by Pat and Mike was 10% for the first note, 12% for the second note, and 15% for the third note. How much total interest was paid to Pat by Mike? (2.3)

Answer 1

If P =Principal, n = no. of years, R = rate of interest then,

Simple Interest = PnR/100

Question 1)

For the first note, P=$1000, n=1,R=10%

Simple Interest = $1000*1*10/100= $100

For the second note, P=$750,n=2,R=12%

Simple Interest = $750*2*12/100 =$180

For the third note, P=$750,n=3,R=15%

Simple Interest = $750*3*15/100 = $337.5

Total Interest = $100 + $180 $337.5 = $617.5

Question 2)

Here P = $2500, R =8%, No. of years to pay from t=2 to t=6 i.e n= 4

Total Simple Interest = $2500*4*8/100 = 800

Total Amount to be paid = Principal + Interest = $2500 + $800 = $3300

Since the three payments are equal, The size of each payment = $3300/3 = $1100