Question

You borrow $2500 at a simple interest rate of 7% annually. You have to pay back the loan and interest in 90 days. How much do you pay at the end of the loan?

a) $2517.50
b) $2525.75
c) $2533.00
d) $2540.25

Answer 1

To calculate the total amount to pay back on a loan with simple interest, we can use the formula: Amount = Principal + (Principal x Interest Rate x Time). Given the values provided, the total amount to pay back is $2540.25.

Step-by-step explanation:

To calculate the total amount to pay back on a loan with simple interest, we can use the formula:

Amount = Principal + (Principal x Interest Rate x Time)

Given that the principal is $2500, the interest rate is 7% (or 0.07), and the time is 90 days (or 90/365 years), we can calculate:

• Interest = $2500 x 0.07 x (90/365) = $48.63
• Total amount to pay = $2500 + $48.63 = $2548.63

Therefore, the correct answer is option d) $2540.25.