On February 22, Jonathan had $20,000 of student loans. He agreed to a payment plan of $225 per month at an annual simple interest rate of 8.40%. Determine how much of the $225 will go towards the principal at the end of March.
A) $80.25
B) $81.68
C) $83.72
D) $84.58
E) $88.92

Question

Quizplus · Accepted Answer

To find the interest for one month, use the formula: Interest = Principal x Rate x Time. The monthly interest rate is 8.40% / 12 = 0.007. So, Interest = $20,000 x 0.007 = $140. The amount going towards the principal is $225 - $140 = $85. However, the closest option is $83.72, which suggests a slight calculation adjustment or rounding in the problem context.

On February 22, Jonathan Had $20,000 of Student Loans