Irene borrowed $2,200 for three months at an annual rate of 11.25%
under a single-payment plan. How much interest must she pay?
a. $247.50
b. $61.88
c. $2,475
d. $2,252.25
Using the formula for simple interest, I = Prt, where P is the principal, r is the annual rate as a decimal, and t is the time in years:
I = 2,200 x 0.1125 x (3/12)
I = 61.88
Therefore, Irene must pay $61.88 in interest. The answer is b.