Question

Benson has a bankruptcy on his credit report, so he pays higher interest rates on his current loans. He calculates that the extra money he pays in additional interest each year, if invested at the rate of 2% for one year, could earn him simple interest totaling $180. How much does Benson pay in additional interest each month?
a.
$360
b.
$750
c.
$900
d.
$1,000

Answer 1

Let P be the extra interest Benson pays per year. Simple interest I = Prt = P(0.02)(1) = 0.02P = 180, so P = 180 / 0.02 = 9000. Monthly extra = 9000 / 12 = 750.

Answer: (b) $750