Final answer:
The simple interest on a $20,000 loan at a 7½% annual rate for 6 months is calculated using the formula I = PRT, resulting in $750 of interest.
Step-by-step explanation:
To calculate the simple interest earned on a $20,000 loan borrowed for 6 months at a rate of 7½%, you use the formula I = PRT, where 'I' is the interest, 'P' is the principal amount, 'R' is the rate of interest per year (as a decimal), and 'T' is the time in years. In this case, the time is half a year (6 months out of 12), and the rate needs to be converted to a decimal by dividing by 100.The calculation follows:Principal (P): $20,000Rate (R): 7.5% / 100 = 0.075Time (T): 6 months / 12 = 0.5 percenters (I): $20,000 × 0.075 × 0.5 = $750The simple interest earned over 6 months on this loan is $750.