Bill borrowed $3,600 and will be charged a simple interest rate of 18%. Bill will pay ________ interest for borrowing the money on April 1 and repaying the money on December 31.
A) $468
B) $648
C) $486
D) $162

Question

Quizplus · Accepted Answer

Simple interest is calculated using the formula I = PRT, where I is the interest, P is the principal amount ($3,600), R is the annual interest rate (18% or 0.18), and T is the time in years. From April 1 to December 31 is 9 months, or 9/12 of a year. Thus, I = $3,600 * 0.18 * (9/12) = $486.

Bill Borrowed $3,600 and Will Be Charged a Simple Interest