Carly borrowed $2,500 from Clare on July 18 at an interest rate of 8%. On March 7 of the following year, Carly repaid the loan with interest. How much interest should she have paid?
A) $72.88
B) $21.63
C) $127.12
D) $112.50
E) $90.87

Question

Quizplus · Accepted Answer

To calculate the interest, we use the formula I = PRT, where I is the interest, P is the principal amount ($2,500), R is the annual interest rate (8% or 0.08), and T is the time in years. From July 18 to March 7 of the following year is 7 months and 17 days, or approximately 7.56 months. Converting this to years gives us about 7.56/12 = 0.63 years. Plugging these values into the formula gives us I = $2,500 * 0.08 * 0.63 = $126, which is approximately $127.12.

Carly Borrowed $2,500 from Clare on July 18 at an Interest