Question

Eric needs a $1,500 loan in order to buy a drone. Which loan option would cost him the MOST in interest?

A)
A 24-month loan with a 6.25% annual simple interest rate.
B)
A 30-month loan with a 6.00% annual simple interest rate.
09
A 36-month loan with a 4.00% annual simple interest rate.
D)
A 42-month loan with a 3.75% annual simple interest rate.

Answer 1

the one that cost the most interest is option B.

Explanation:

In order to select the one that costs more we need to apply the data from each one to the formula below:

M = C*r*t

Where M is the interest amount, C is the value of the loan, r is the interest rate and t is the time elapsed. We have:

A)

M = 1500*0.0625*(24/12) = 187.5

B)

M = 1500*0.06*(30/12) = 225

C)

M = 1500*0.04*(36/12) = 180

D)

M = 1500*0.0375*(42/12) = 196.875

Therefore the one that cost the most interest is option B.