Question

Owen borrows $25,000 for 5 years at a 6% interest. What is the cost of the

loan, or total interest?

Answer 1

Correct answer is $7,500

Explanation:

To solve, use the simple interest formula to solve.

I = Prt

Principle (p): 25,000

Rate (r): 6%

Time (t): 5

Were trying to find i (interest):

converting R percent to r a decimal

6%/100 = 0.06 per year,

then, solving our equation

I = 25000 × 0.06 × 5 = 7500

I = $ 7,500.00

The simple interest accumulated on a principal of $ 25,000.00 at a rate of 6% per year for 5 years is $ 7,500.00.