Question

Jamie borrows $2,000 to purchase a new living room furniture set. She will pay an 8% interest rate over 18 months. How much will Jamie pay in interest?**

a) $180
b) $200
c) $240
d) $300

Answer 1

Jamie will pay $240 in interest on a $2,000 loan with an 8% interest rate over 18 months, using the simple interest formula.

Step-by-step explanation:

Jamie borrows $2,000 to purchase new living room furniture with an 8% interest rate over 18 months. To calculate the total interest paid over the 18 months, use the simple interest formula, which is Interest (I) = Principal (P) × Rate (R) × Time (T).

Here, P = $2,000, R = 8% or 0.08 (as a decimal), and T = 1.5 years (since 18 months is 1.5 years).

Thus, the total interest Jamie will pay is:

I = P × R × T
I = $2,000 × 0.08 × 1.5
I = $240

So, Jamie will pay $240 in interest, making the correct answer (c) $240.