Question

Iveta takes out a mortgage of $100,000 to purchase a property. The interest rate is calculated as a simple interest rate of 5% per year. How much interest would Iveta have to pay after six years? Round your answer to the nearest dollar. Do NOT round until you have calculated your final answer.

Answer 1

Iveta would have to pay $30,000 in simple interest on a $100,000 mortgage at a 5% interest rate over six years.

Step-by-step explanation:

To calculate the amount of interest that Iveta would have to pay after six years on a $100,000 mortgage at a simple interest rate of 5%, you use the simple interest formula:

I = P × r × t

where:

• I is the interest
• P is the principal amount ($100,000)
• r is the annual interest rate (5% or 0.05)
• t is the time in years (6 years)

Substituting the values, we get:

I = $100,000 × 0.05 × 6

Calculating this we get:

I = $30,000

Therefore, Iveta would have to pay $30,000 in interest after six years.