Karl has a loan of $6,750. This loan has a simple interest rate of 2.5% per year. No payments will be made on the loan until the end of one year.
How much interest will Karl pay on this loan at the end of one year?
$168.75
$186.25
$1,687.50
$1,862.55
...
$168.75
To calculate the interest Karl will pay on this loan at the end of one year, we can use the formula for simple interest:
Interest = Principal x Rate x Time
The principal is $6,750 and the rate is 2.5% per year. The time is 1 year. Plugging these values into the formula, we get:
Interest = $6,750 x 0.025 x 1
Simplifying this calculation, we get:
Interest = $168.75
Therefore, Karl will pay $168.75 interest on this loan at the end of one year.
So, the correct answer is $168.75.
To calculate the amount of interest Karl will pay on the loan at the end of one year, we can use the formula for simple interest:
Interest = Principal * Rate * Time
Where:
Principal = $6,750 (loan amount)
Rate = 2.5% per year (0.025 as a decimal)
Time = 1 year
Plugging these values into the formula:
Interest = $6,750 * 0.025 * 1
Calculating this equation gives us:
Interest = $168.75
Therefore, the correct answer is $168.75.