Question

Roxie plans on purchasing a new desktop computer for $1250. Which loan description would result in the smallest amount of interest she would have to pay?

12 months at 6.25% annual simple interest rate

18 months at 6.75% annual simple interest rate

24 months at 6.5% annual simple interest rate


30 months at 6.00% annual simple interest rate

Answer 1

12 months at 6.25%

Step-by-step explanation:

You deposit $1250 into a bank account paying 6.25% simple interest per month. You left the money in for 12 months. Find the interest earned and the amount at the end of those 12 months?

Result:

The interest is $937.5 and the amount is $2187.5.

Step-by-step explanation:

STEP 1: Convert interest rate of 6.25% per month into rate per year.

STEP 2: Convert 12 months into years.

STEP 3: Find an interest by using the formula , where I is interest, P is total principal, i is rate of interest per year, and t is total time in years.

In this examplee P = $1250, i = 75% and t = 1 years, so

STEP 4: Find an amount by using the formula .

Since P = $1250 and I = $937.5 we have