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) $2521.92
b) $2528.08
c) $2534.24
d) $2540.40

Answer 1

To calculate the total amount to be paid at the end of the loan, we need to calculate the interest using the formula I = P * r * t. In this case, the principal amount is $2500, the interest rate is 7%, and the time is 90 days. The total amount to be paid at the end of the loan is the sum of the principal amount and the interest.

Step-by-step explanation:

To calculate the total amount to be paid at the end of the loan, we need to calculate the interest first. The formula for simple interest is:

I = P * r * t

where I is the interest, P is the principal amount (the borrowed amount), r is the interest rate, and t is the time in years.

In this case, the principal amount is $2500, the interest rate is 7% (or 0.07), and the time is 90 days (or 90/365 years). Plugging these values into the formula, we get:

I = 2500 * 0.07 * (90/365)

I ≈ $47.95

The total amount to be paid at the end of the loan is the sum of the principal amount and the interest:

Total = Principal + Interest = $2500 + $47.95

Total ≈ $2547.95

Therefore, the correct answer is option d) $2540.40