Ursula borrowed $2,400 for three months at an annual rate of 10.75%
under a single-payment plan. How much interest must she pay?
a. $2,457
b. $258
c. $64.50
d. $2,628
We can start by using the formula for simple interest:
Interest = Principal x Rate x Time
In this case, the Principal is $2,400, the Rate is 10.75% (or 0.1075 as a decimal), and the Time is 3 months (or 0.25 years since the rate is annual). Plugging these values into the formula, we get:
Interest = $2,400 x 0.1075 x 0.25 = $64.50
Therefore, Ursula must pay $64.50 in interest. The answer is (c).