Question

Clarissa needs a $2,500 loan in order to buy a car. Which loan option would allow her to pay the least amount of interest?

A) An 18-month loan with a 4.75% annual simple interest rate
B) A 30-month loan with a 4.00% annual simple interest rate
C) A 24-month loan with a 4.25% annual simple interest rate
D) A 36-month loan with a 4.50% annual simple interest rate

Answer 1

A

Explanation:

18x4.75=85.5 least

30x4=120 3rd least

24x4.25=102 2nd least

36x4.5=162 Most

Answer 2

Option A.

Explanation:

Clarissa needs a $2,500 loan in order to buy a car.

There are 4 options of loan we will calculate all the options that pay the least amount of interest.

To calculate the interest we will use this formula :

`(P* R* time)/(100)`

Where P = Principal amount

R = rate of interest

T = time in years

A) Principal 2,500 interest 4.75% and time 18 months (1.5 years)

`(2500* 4.75* 1.5)/(100)`

= $178.125

B) Principal 2,500 interest 4% and time 30 months (2.5 years)

`(2500* 4* 2.5)/(100)`

= $250

C) Principal 2,500 interest 4.25% and time 24 months (2 years)

`(2500* 4.25* 2)/(100)`

= $212.50

D) Principal 2,500 interest 4.50% and time 36 months (3 years)

`(2500* 4.5* 3)/(100)`

= $337.50

The least amount of interest would be in option A.