Question

You need a loan and your friend, Joey, will lend you the $1250 you need. He has you sign a promissory note for four years with an annual simple interest rate of 5.5%. What is the total amount that you will pay Joey at the end of the four years?

$1525
$4225
$2750
$275

Answer 1

$1525

Explanation:

1. 5.5% out of $1250= 68,75
2. 68,75 x 4 (years) = 275
3. 1250 + 275 = 1525