Question

Ramona needs $2,095 immediately to pay for damage she did to her

friend's car. She obtains a one-year loan with a 12% simple yearly interest
rate. How much did she pay in interest only for the loan?

Answer 1

She paid $251.40 in interest only for the loan.

Explanation:

This is a simple interest problem.

The simple interest formula is given by:

`E = P*I*t`

In which E is the amount of interest, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.

In this problem:

`P = 2095, t = 1, I = 0.12`

So

`E = 2095*0.12*1 = 251.4`

She paid $251.40 in interest only for the loan.