Future Business Leaders of America (FBLA) Business Calculations Practice Test

To determine the interest on a $140,000 loan at an annual interest rate of 9.6 percent for a period of 36 months, you can use the formula for simple interest:

Interest = Principal × Rate × Time

1. **Convert the annual interest rate to a decimal**:

9.6 percent as a decimal is 0.096.

2. **Determine the time in years**:

Since the time given is 36 months, you convert that to years by dividing by 12:

36 months ÷ 12 months/year = 3 years.

3. **Inserting values into the formula**:

Principal = $140,000

Rate = 0.096

Time = 3 years

Therefore, the calculation will be:

Interest = $140,000 × 0.096 × 3

4. **Calculating the interest**:

First, calculate $140,000 × 0.096, which equals $13,440. Then multiply that by 3:

$13,440 × 3 = $40,320.

The result of $40,320 represents the total interest accrued on the loan over the 36