Question

Tammy borrowed $5500 to buy materials for her start-up business at home with a 7.5% interest rate for four years. What is the total interest accrued?

a) $1262.50
b) $1575.00
c) $1837.50
d) $2100.00

Answer 1

The total interest accrued on the loan is found using the simple interest formula I = PRT. The correct calculation shows that the interest is $1650, which is not one of the options provided, indicating a possible error in the choices.

Step-by-step explanation:

The student is asking how to calculate the total interest accrued on a loan of $5500 borrowed at a 7.5% interest rate for four years. To find the total interest accrued, we use the formula for simple interest: I = PRT, where I stands for interest, P stands for the principal amount, R is the interest rate, and T is the time in years.

Using the given values:
P = $5500 (the principal amount)
R = 7.5% = 0.075 (the interest rate)
T = 4 years (the time)

Plugging these into the simple interest formula, we get:
I = $5500 × 0.075 × 4

Now, we calculate:
I = $5500 × 0.075 × 4 = $1650

So the total interest accrued on the loan is $1650. Therefore, the correct answer among the provided choices is none of them. There might be an error in the choices given.