Please check my answer thank you very much.
On May 19, Bette Santoro borrowed $3,000 from Resse Bank at a rate of 12 ½ %. The loan is to be repaid on October 8. Assuming the loan is based on exact interest, what’s the total interest cost to Bette?
A. $345.89
B. 175.89
C. 265.89
D. 145.89
My answer is D. 145.89
To calculate the total interest cost for the loan, we need to use the formula:
Interest = Principal * Rate * Time
Let's break down the given information:
Principal (amount borrowed) = $3,000
Rate = 12 ½ % = 12.5% = 0.125 (decimal form)
Time = From May 19 to October 8 (in months)
First, we need to calculate the number of months from May 19 to October 8.
May 19 to June 19 = 1 month
June 19 to July 19 = 1 month
July 19 to August 19 = 1 month
August 19 to September 19 = 1 month
September 19 to October 8 = 0.5 month (approximation)
Adding up the months: 1 + 1 + 1 + 1 + 0.5 = 4.5 months
Now, we can calculate the total interest cost:
Interest = Principal * Rate * Time
= $3,000 * 0.125 * 4.5
= $1,687.5
Since the answer choices are all in dollar amounts, we need to round the answer to the nearest cent:
Total interest cost = $1,687.5 ≈ $1,687.50
Now, let's check the answer choices:
A. $345.89 - Not the correct amount
B. $175.89 - Not the correct amount
C. $265.89 - Not the correct amount
D. $145.89 - Not the correct amount
Therefore, the correct answer is none of the given options. The total interest cost to Bette is approximately $1,687.50