Question

barry wants to take out a loan from his bank for $1,000 to buy a bicycle. the interest rate on the loan from the bank is 9%. he wants to pay the total amount in 3 monthly payments. what is the amount that barry would pay in interest for his loan?
possible points: 4

Explanation:

Step1: Identify the formula for simple interest

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

Step2: Convert the time to years

Barry is paying the loan in 3 months. Since there are 12 months in a year, \( t=\frac{3}{12} = 0.25 \) years.

Step3: Convert the interest rate to decimal

The annual interest rate is 9%, so \( r=\frac{9}{100}=0.09 \).

Step4: Substitute the values into the formula

The principal \( P = 1000 \) dollars. Substituting into \( I = P\times r\times t \), we get \( I=1000\times0.09\times0.25 \).

Step5: Calculate the interest

First, calculate \( 1000\times0.09 = 90 \), then \( 90\times0.25 = 22.5 \).

Answer:

\( \$22.5 \)