Question

You take out a simple interest loan for $4,500
at an interest rate of 18% for 3 years. How much will you pay in interest?

Answer 1

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

\[
\text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time}
\]

Where:
- Principal = $4,500
- Rate = 18% (or 0.18 when expressed as a decimal)
- Time = 3 years

Plugging in the values:

\[
\text{Interest} = 4500 \times 0.18 \times 3
\]

Calculating this step by step:

1. Calculate \( 4500 \times 0.18 \):

\[
4500 \times 0.18 = 810
\]

2. Now multiply by the time (3 years):

\[
810 \times 3 = 2430
\]

So, the total interest you will pay over 3 years is **$2,430**.