On January 1, 2010, a homeowner borrowed $5,000 for a term of six months to complete some home improvements, paying an annual interest rate of 8 percent.How much principal and interest will the homeowner pay back on July 1, 2010?
A)$2,500
B)$2,900
C)$5,200
D)$5,400

Question

Quizplus · Accepted Answer

The interest for 6 months on a $5,000 loan at an annual rate of 8% is calculated as follows: Interest = Principal x Rate x Time = $5,000 x 0.08 x 0.5 = $200. Therefore, the total amount to be paid back is the principal plus interest, which is $5,000 + $200 = $5,200.

On January 1, 2010, a Homeowner Borrowed $5,000 for a Term