Carl borroowed $2,500 for six months at an annual interest rate of 11%. How much must he repay at the end of six months?
a. $275
b. $2,637.50
c. $87.50
d. $2,762.50
Please show all steps needed to get answer in simple terms.
Well, well, well, let's figure this out! To find out how much Carl must repay at the end of six months, we need to take into account the principal amount borrowed and the interest accrued.
First, let's find out how much interest Carl will pay. We take the annual interest rate of 11% and divide it by 12 to get the monthly interest rate. So, the monthly interest rate is 11%/12 = 0.9167% (approximately).
Next, we calculate the interest for six months by multiplying the monthly interest rate by the principal amount borrowed: 0.9167% * $2,500 = $22.92.
So, the total amount Carl has to repay is the sum of the principal amount and the interest: $2,500 + $22.92 = $2,522.92.
But wait, hold your laughter, that's not one of the answer choices! Ah, here comes the trick!
We must round the total amount to the nearest cent, as it is more practical in real life. Rounding it up, Carl would have to repay $2,522.92.
Now, if we look closely, we don't see this exact amount among the answer choices. The closest one is $2,637.50, which is answer choice b. But hey, don't go jumping to conclusions! Let's examine the remaining options.
Option a, $275, seems quite unrealistic. It's way too low for a loan of $2,500.
Option c, $87.50, is downright ludicrous. That amount is far too small to repay a significant loan like this.
Finally, option d, $2,762.50, sounds a bit excessive. It's overcharging poor Carl!
So, after all that fun analysis, the only reasonable option left is b, $2,637.50. Though it's not a perfect match for our rounded amount, it's the closest one.
Remember, with loans, it's always best to clearly understand all aspects, including interest rates and repayment amounts. Now, run along and tell Carl the news!
To calculate the amount Carl must repay at the end of six months, we need to calculate the interest and add it to the borrowed amount.
Step 1: Calculate the interest amount.
First, we need to find the interest for six months. The formula to calculate the interest is:
Interest = Principal (borrowed amount) × Rate × Time
In this case,
Principal = $2,500
Rate = 11% expressed as a decimal = 0.11
Time = 6 months
Interest = $2,500 × 0.11 × 6 = $1,650
Step 2: Calculate the total amount to be repaid.
To calculate the total amount, we need to add the interest to the principal.
Total amount = Principal + Interest
Total amount = $2,500 + $1,650 = $4,150
Therefore, Carl must repay $4,150 at the end of six months.
Answer: The correct option is not listed among the given choices.
To determine how much Carl must repay at the end of six months, we need to calculate the total amount including the principal borrowed and the interest.
Step 1: Calculate the interest.
The formula to calculate simple interest is:
Interest = (Principal) * (Rate) * (Time)
In this case, the principal amount borrowed is $2,500, the annual interest rate is 11%, and the time period is six months.
Converting the annual interest rate to a decimal, we get 11% = 0.11, and since the rate is annual, we divide it by 12 to get the monthly rate.
So, the interest can be calculated as follows:
Interest = (2500) * (0.11/12) * (6) = $137.50
Step 2: Add the interest to the principal.
The total amount to be repaid is the sum of the principal borrowed and the interest amount.
Total = Principal + Interest
Total = $2,500 + $137.50 = $2,637.50
Therefore, the correct answer is b. $2,637.50.
P = Po + Po*r*t
P = 2500 + 2500*(0.11/12)*6 =
Note: (0.11/12) = Monthly % rate.