Question

Steven borrows $60,000 for school. The interest rate is 6.5%. He wants to pay off the loan in 12 years. What would be the simple interest rate?

$4,680
$4,680,000
$44,000
$46,800

Answer 1

$46,800

Explanation:

Simple Interest Formula

I = Prt

where:

• I = interest
• P = principal
• r = interest rate (in decimal form)
• t = time (in years)

Given:

• P = $60,000
• r = 6.5% = 0.065
• t = 12 years

Substitute the given values into the formula and solve for I:

`\implies \sf I=60000(0.065)(12)`

`\implies \sf I=3900(12)`

`\implies \sf I=46800`

Therefore, the interest is $46,800.

Answer 2

• D) $46800

===========================

The amount of simple interest is:

• Interest = Loan * rate * time

or

• I = P * r * t

Given:

• P = $60000, r = 6.5%, t = 12 years

Substitute and calculate:

• I = 60000*(6.5/100)*12 = 46800

The matching choice is D.