Question

Mr. Fixit wanted to remodel his business, so he got a loan of $4,300, at a rate of 6 percent interest. He paid this loan off in 8 months. Knowing this, what was the total amount of interest Mr. Fixit paid?

A. $21.50
B. $172
C. $258
D. $358

Answer 1

Option B - $172

Explanation:

Given : Mr. Fixit wanted to remodel his business, so he got a loan of $4,300, at a rate of 6 percent interest. He paid this loan off in 8 months.

To find : What was the total amount of interest Mr. Fixit paid?

Solution :

Applying compound interest formula,

`A=P+I`

Where,
`A=P(1+r)^t`

Here, A is the amount

P is the principal P=$4300

r is the interest rate r=6%

t is the time = 8 months

Substitute the value in the formula,

`A=4300(1+(6)/(1200))^8`

`A=4300(1+0.005)^8`

`A=4300(1.005)^8`

`A=4300* 1.04`

`A=4472`

Now, We find the interest

`4472=4300+I`

`I=4472-4300`

`I=\$172`

Total amount of interest Mr. Fixit paid is $172.

Therefore, Option B is correct.