What is the simple interest on $1500.00 for 4 months at an annual interest rate of 6.75%?

• A. $101.25
• B. $50.63
• C. $33.75
• D. $222.22

Answer: (C)

To find the simple interest on a principal amount, you can use the formula:

[

\text{Simple Interest} = P \times r \times t

]

where:

• ( P ) is the principal amount,

• ( r ) is the annual interest rate expressed as a decimal,

• ( t ) is the time the money is invested or borrowed for, expressed in years.

In this scenario, the principal amount ( P ) is $1500.00. The annual interest rate ( r ) is 6.75%, which can be converted to decimal form by dividing by 100, giving ( 0.0675 ). The time ( t ) is 4 months, which can be expressed in years by dividing by 12, resulting in approximately ( \frac{4}{12} = \frac{1}{3} ) years or 0.3333 years.

Now, we plug the values into the formula:

[

\text{Simple Interest} = 1500 \times 0.0675 \times \frac{1}{3}

]

Calculating this step-by-step:

1. Calculate ( 1500 \times 0.0675