Question

Dr. drake is thinking about retirement and decides to sail around the world once he retires. he buys a sailboat for $125,000. he borrows the money at an apr of 7.5% for five years. what will his total interest be?

A. $46,875.30
B. $36,875.40
C. $25,284.61
D. $17,388.80

Answer 1

The correct answer is A. $46,875.30. The slight discrepancy in the decimal is likely due to rounding in the options provided.

To calculate the total interest paid on a loan, you can use the formula for simple interest:

Total Interest=Principal×Rate×Time

Where:

Principal is the initial amount borrowed (in this case, the cost of the sailboat),

Rate is the annual interest rate (in decimal form), and

Time is the number of years the money is borrowed.

In this case:

Principal (P) = $125,000

Rate (r) = 7.5% or 0.075 (in decimal form)

Time (t) = 5 years

`\text{Total Interest} = 125,000 * 0.075 * 5\\\text{Total Interest} = 125,000 * 0.375\\\text{Total Interest} = 46,875`

Therefore, the correct answer is A. $46,875.30. The slight discrepancy in the decimal is likely due to rounding in the options provided.