Question

Find the total INTEREST and the NEW BALANCE.

I = $3,000 • (10%) • (2 years)

a) Interest = $300, New Balance = $6,000
b) Interest = $600, New Balance = $3,600
c) Interest = $3,000, New Balance = $6,600
d) Interest = $600, New Balance = $3,000

Answer 1

The total interest on a $3,000 loan at a 10% rate over 2 years is $600. Hence, the new balance including the principal and the interest would be $3,600.

Step-by-step explanation:

The correct answer to determine the total interest and the new balance is to use the formula for simple interest: I = PRT, where I is the interest, P is the principal, R is the rate of interest per year, and T is the time in years. Given that the principal P is $3,000, the rate R is 10% or 0.10, and the time T is 2 years, the interest I can be calculated as:

I = $3,000 × 0.10 × 2 = $600

The new balance would be the original principal plus the interest earned, calculated as:

New Balance = Principal + Interest

New Balance = $3,000 + $600 = $3,600

Therefore, the correct answer is b) Interest = $600, New Balance = $3,600.