Question

Andrew has a four-year college loan for $20,000. The lender charges a simple interest rate of 5 percent. How much interest will he have to pay? simple interest = P × r × t A. $800 B. $4,000 C. $10,000

Answer 1

Answer:

B. $4,000

Explanation:

The formula for the simple interest is

$interest = P\cdot r \cdot t$

where

P is the principal

r is the interest rate

t is the number of years

In this problem,

P = 20,000 $

r = 0.05

t = 4 years

So the interest is

$P=(20,000 )(0.05 )(4)=4,000$