Question

toms personal loan: option a
background info: tom needs money to pay for education expenses, and he finds a personal loan. the loan would require him to repay the principal in one lump sum after three years.
loan option a
principal: $9,000
type of interest: simple interest
interest rate: 11%
rate of accrual: once per year
use the formula for simple interest.
$a = (p)(r)(t)$
remember, a refers to the interest accrued.
calculate the total interest tom would pay, in addition to paying back his $9,000 in principal.
○ $970
○ $1,970
○ $2,970
○ $3,970

Explanation:

Step1: Recall simple interest formula

The formula for simple interest is \( A = P \times r \times t \), where \( P \) is the principal, \( r \) is the annual interest rate (in decimal), and \( t \) is the time in years.

Step2: Convert the interest rate to decimal

The interest rate is \( 11\% \), so in decimal form, \( r=\frac{11}{100} = 0.11 \).

Step3: Identify the values of \( P \), \( r \), and \( t \)

We have \( P = 9000 \) dollars, \( r=0.11 \), and \( t = 3 \) years (since the loan is for three years).

Step4: Calculate the interest

Substitute the values into the formula: \( A=9000\times0.11\times3 \). First, calculate \( 9000\times0.11 = 990 \). Then, multiply by 3: \( 990\times3=2970 \).

Answer:

\$2,970 (corresponding to the option with \$2,970)