A bank offers an annual simple interest rate of 7% on home improvement loans. How much interest would need to be paid if Billy borrowed $18,500 over a period of 3.5 years?
$45,325.00
$18,500.00
$4,532.50
$23,032.50
To calculate the interest, we use the formula:
Interest = Principal * Rate * Time
Plugging in the given values:
Interest = $18,500 * 0.07 * 3.5 = $4,532.50
Therefore, the correct answer is $4,532.50.