Answer: the correct option is A
Step-by-step explanation:
Cost of the bus is $25000. She took a loan of $25000 to be paid of in 5 years at an interest rate of 7%.
The formula for simple interest is expressed as
I = PRT/100
Where
I = interest
P = principal or initial amount borrowed
T = time in years
R = interest rate in percentage
From the information given,
P = 25000
R = 7%
T = 5 years
Therefore
I = (25000 × 7 × 5)/100 = 875000/100
I = $8750
Answer:
Mrs. Siebenaller will pay A. US$ 8,750.00 of interest for the loan
Step-by-step explanation:
1. Let's review the data given to us for solving the question:
Loan amount = US$ 25,000
Time to pay off the loan = 5 years
Annual interest rate = 7% annually
2. Let's find how much interest Mrs. Siebenaller will pay, using the following formula:
Interest = PV * (1 + r) * n - PV
PV = Loan = US$ 25,000
number of periods (n) =5 (number of years)
rate (r) = 7% = 0.07
Replacing with the real values, we have:
Interest = [25,000 * (1 + 0.07) * 5 ] - 25,000
Interest = [ 25,000 * 1.35] - 25,000
Interest = US$ 8,750
Mrs. Siebenaller will pay US$ 8,750.00 of interest for the loan
