Question

Eugene borrows $250 at a 4% annual interest rate. If he does not make any payments, how much simple interest will he owe in 18 months?

Answer 1

Answer:

$265

Step-by-step explanation:

We can use the simple interest formula for this:

$A = P (1 + rt)$

P = initial balance

r = annual interest rate

t = time

First, change 4% into its decimal form:

4% -> $\frac{4}{100}$ -> 0.04

Next, we need to change the annual interest rate to 1.5 since 18 months is 1.5 years. Now plug in the values:

$A=250(1+(0.04)(1.5))$

$A=265$

Eugene owes $265 of interest.