Question

Ruby's loan for $450 was approved at a rate of 3% per year for 3 years. How much interest will he pay?

a) $40.50
b) $36.00
c) $13.50
d) $4.50

Answer 1

Ruby will pay $40.50 in interest on her $450 loan at an annual interest rate of 3% over 3 years, using the simple interest formula I = PRT.

Step-by-step explanation:

The question involves calculating the total simple interest that Ruby will pay on a loan of $450 with an annual interest rate of 3% for a period of 3 years. To calculate the interest, you can use the formula for simple interest, which is I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is the time in years.

Using Ruby's loan details, we have:

• Principal (P) = $450
• Rate (R) = 3% per year or 0.03 as a decimal
• Time (T) = 3 years

Substitute these values into the formula:

I = PRT

I = $450 × 0.03 × 3

I = $450 × 0.09

I = $40.50

Therefore, Ruby will pay $40.50 in interest over the 3-year period, which corresponds to answer choice (a).