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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › SIMPLE INTEREST
Hello!
My query is with regard to the simple interest computation.
For example: the loan amount is $2,300,000
time is 72 months (6 years)
rate is 5%
the loan period is starting from Oct 2019.
So what would the simple interest be per month?
The year end being 31/3/2020
So this is how I did (please confirm if I’m on the right track):
I = PRT
I = 2,300,000*0.05*6
I = 690,000
Now what can I do to get the interest per month?
Is it (690,000/72) $9,583 per month i.e as at 31/10/2019
Then, as at 30/11/2019 again $ 9,583
and so forth until the year end.
Whereby the total interests during the year until 31/3/2020 would be $ 57,498 (9583 *6 months)
Please help.
If the interest rate is 5% per year, the the monthly interest rate (if it is simple interest as opposed to compound interest) is 5/12 = 0.4167% per month.
However this is not at all relevant for Paper FM and so I am bit puzzled as to why you are asking.