Question

Tonya took out a loan to help pay for her house. She borrowed $70,000 for 15 years at a yearly simple interest rate of 5%. How much interest will she end up paying the bank?
A.
$52,500
B.
$525,000
C.
$525
D.
$10,500

Answer 1

To calculate the total interest on a simple interest loan, you can use the formula:

\[
\text{Interest} = P \times r \times t
\]

where:
- \( P \) is the principal amount (the initial amount borrowed),
- \( r \) is the yearly interest rate (as a decimal), and
- \( t \) is the time in years.

In this case:
- \( P = 70,000 \)
- \( r = 5\% = 0.05 \)
- \( t = 15 \)

Plugging in the values:

\[
\text{Interest} = 70,000 \times 0.05 \times 15
\]

Calculating this step-by-step:

1. Calculate \( 70,000 \times 0.05 \):
\[
70,000 \times 0.05 = 3,500
\]

2. Then multiply that result by 15:
\[
3,500 \times 15 = 52,500
\]

Thus, the total interest Tonya will end up paying the bank is **$52,500**.

The correct answer is:
**A. $52,500**