Question

How much interest would Paul pay on his loan after 2 years if he owed $1200 at an interest rate of 15% per year?

[Formula: Simple Interest (SI) = Principal (P) x Rate (R) x Time (T)]
a) $360
b) $180
c) $420
d) $3600

Answer 1

Paul would pay $360 in simple interest on a $1200 loan at a 15% annual rate after 2 years, using the simple interest formula.

Step-by-step explanation:

To calculate the simple interest that Paul would pay on his $1200 loan after 2 years with an annual interest rate of 15%, we can use the simple interest formula:

Simple Interest (SI) = Principal (P) × Rate (R) × Time (T)

By substituting the given values into the formula, we get:

SI = $1200 × 0.15 × 2

SI = $360

Therefore, Paul would pay $360 in interest over the 2-year period, so the correct answer is (a) $360.