Question

Jordan took out a loan for 14 months and was charged simple interest at an annual rate of 5.75%. If the amount of the loan was $850, what is the amount of interest she had to pay?

Answer 1

$57.02

Explanation:

`\boxed{\begin{minipage}{7 cm}\underline{Simple Interest Formula}\\\\$ I = Prt$\\\\where:\\\\ \phantom{ww}$\bullet$ $I =$ interest \\ \phantom{ww}$\bullet$ $P =$ principal amount \\ \phantom{ww}$\bullet$ $r =$ interest rate (in decimal form) \\ \phantom{ww}$\bullet$ $t =$ time (in years) \\ \end{minipage}}`

Given:

• P = $850
• r = 5.75% = 0.0575
• t = 14 months = 14/12 years

Substitute the values into the simple interest formula and solve for I:

`\implies I=850 \cdot 0.0575 \cdot (14)/(12)`

`\implies I=57.0208333...`

Therefore, the amount of interest is $57.02 (nearest cent).