Multiple choice

How much simple interest is earned on a $12,000 loan at 9% per year if the borrower repays the amount after 5 months?

  1. $425
  2. $450
  3. $475
  4. $500
  5. $525
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

SI = (P * R * T) / 100. P = 12000, R = 9%, T = 5/12 years. SI = (12000 * 9 * 5) / (100 * 12) = 120 * 9 * 5 / 12 = 10 * 9 * 5 = 450.

AI explanation

Using the simple interest formula of principal multiplied by rate multiplied by time, we substitute the given values. Since the time is 5 months, it converts to 12 by 5 years. We calculate 12000 times 0.09 times (5 by 12), which equals 12000 times 0.09 times 0.4166. This calculation yields a simple interest of $450.

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