Question

Mr. and Mrs. Thomas open a restaurant and borrow $8,200 from the bank.

They borrow the money at a 6.2% simple interest rate.

The loan term is 7 years.

How much interest will Mr. and Mrs. Thomas pay on the loan?

Options:
A) $2,878.40
B) $3,328.40
C) $4,812.00
D) $5,132.00

Answer 1

To calculate simple interest, use the formula I = PRT. For Mr. and Mrs. Thomas' loan of $8,200 at 6.2% over 7 years, I = $8,200 * 0.062 * 7, which equals $3,572.40, but this answer does not match the provided options indicating a potential error.

Step-by-step explanation:

The question is related to simple interest calculation. To calculate the interest Mr. and Mrs. Thomas will pay on their loan, we use the simple interest formula I = PRT, where I is the interest, P is the principal amount (the initial loan), R is the interest rate (in decimal form), and T is the time in years. In this case, P = $8,200, R = 0.062 (6.2% expressed as a decimal) and T = 7 years.

Plugging these values into the formula gives us:

I = $8,200 × 0.062 × 7 = $3,572.40

However, this result does not match any of the options provided. Let's cross-check the calculation:

I = $8,200 × 0.062 × 7 = $3,572.40

Double-checking our calculations is important to ensure accuracy. Given the options, there may be an error in the provided choices, or an error in the calculation process.