Final answer:
Waldo will pay a total of $2,073.60 in simple interest over 5 years for his $720 loan at a monthly interest rate of 4.8%, after converting the rate to an annual percentage. The provided options do not match the calculated interest, suggesting there may be an error in the question setup.
Step-by-step explanation:
To calculate the simple interest that Waldo will pay on his loan, we use the simple interest formula:
I = PRT, where:
- I is the interest
- P is the principal amount (the initial amount of the loan)
- R is the rate of interest per year
- T is the time the money is borrowed for, in years
For Waldo's loan, P is $720, the rate of R is 4.8% per year, and T is 5 years. However, the rate given is monthly, so we need to first convert it to an annual rate by multiplying by 12. Then we calculate as follows:
R = 4.8% per month × 12 months/year = 57.6% per year
Now, plug these values into the formula:
I = $720 × 57.6% × 5 years
I = $720 × 0.576 × 5
I = $2,073.60
Therefore, the total interest Waldo will pay over 5 years is $2,073.60, which means none of the provided options A) $3,456 B) $3,600 C) $2,880 D) $2,592 is correct. The question might have an error in the interest rate being monthly instead of annually.