Question

Joe borrowed $7000 from the bank at a rate of 7% simple interest per year how much interest did he pay in six years

a. Joe paid $2940 in interest over six years.
b. Joe paid $420 in interest over six years.
c. Joe paid $630 in interest over six years.
d. Joe paid $1050 in interest over six years.

Answer 1

Using the simple interest formula I = PRT, Joe would have paid $2940 in interest over six years on a $7000 loan with a 7% annual interest rate.

Step-by-step explanation:

To calculate the interest paid on a loan using simple interest, we use the formula I = PRT, where I is the interest, P is the principal amount borrowed, R is the annual interest rate (as a decimal), and T is the time in years. Applying this formula to Joe's loan:

I = PRT

I = $7000 × 0.07 × 6

I = $2940

Therefore, Joe paid $2940 in interest over six years. So, the correct answer is a. Joe paid $2940 in interest over six years.