Question

What is the interest due if $500 is borrowed for 6 months at a simple interest rate of 6% per annum?

Short answer

The interest due is $90.

Step-by-step solution

Step 1. Given information

The amount borrowed is Principle (P) = $500

Rate of interest (r) = $6\%=\frac{6}{100}=0.06$

Time (t) = 6 months = $\frac{6}{12}=\frac{1}{2}years$

Step 2. Use simple interest formula.

If a principal of $P$dollars borrowed for a time period of $t$years at a per annum interest rate $r$, expressed as a decimal, the interest $I$charged is,

$I=Prt$

Plug the values, Interest charged is

role="math" localid="1646652344857" $$\begin{gathered} I=500\times 0.06\times \frac{1}{2} \\ =250\times 0.06 \\ I=\$15 \end{gathered}$$

Step 3. Explanation 

Interested charged for 1 month is $15,

Interest due for 6 months is$6\times \$15=\$90$