# A person takes a simple interest loan out for $5000 for 10 months at 3.5%. How much interest must the person pay? this is the way I calculated the problem 5000 * 0.35 *10/12 = $145.25 However, the...

A person takes a simple interest loan out for $5000 for 10 months at 3.5%. How much interest must the person pay?

this is the way I calculated the problem

5000 * 0.35 *10/12 = $145.25

However, the problem then says to find the future value of the simple interest loan.

so i tried A=(1+ (0.35)(.83))

I get the same answer $145.25

Please help me figure the future value, there is no future time frame besides the 10 months.

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### 3 Answers

You are correct, the interest earned is:

`I=5000*0.035 *(10/12)=5000*0.035*0.83 `

`I=145.25`

To solve for the future value, add the interest to the principal amount.

`A=P + I = 5000+145.25`

`A=5145.25`

**Therefore, the future value of the amount loaned is $5145.25** .

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how to know that to find the future amount we have to add the interest and the principal??????

A person takes a simple interest loan out for $5000 for 10 months at 3.5%. How much interest must the person pay?

= 5000 * 10/12 * 3.5/100

= 5000 * 0.83 * 0.035

= 145.25 interest

Future value (total amount to be paid back Principal amount + interest)

`=>` 5000 + 145.25 = **5145.25 Answer.**

The future value of the simple loan equals the present value plus whatever value it gained or lost. That is how you know you must add the interest.

Think of a car depreciating in value over time. If it originally cost $15,000 and depreciated by $2000 this year; its present day value is not $2000 but rather 15000 (principal) + -2000 (the loss) = $13,000.