On April 7, Madeline had $10,500 in student loans outstanding. She agreed to $75 per month payments to repay these loans. From April 7 to May 5, the interest rates were 3.25%, but increased to 4.5% thereafter. Calculate the amount of simple interest paid for the month of May.
A) $37.93
B) $38.01
C) $38.14
D) $38.88
E) $39.25

Question

Quizplus · Accepted Answer

The simple interest for May is calculated using the formula: Interest = Principal x Rate x Time. The principal is $10,500, the rate for May is 4.5% annually (or 0.045/12 monthly), and the time is 1 month. Thus, the interest for May is $10,500 x 0.045/12 x 1 = $38.14.

On April 7, Madeline Had $10,500 in Student Loans Outstanding