Use the equation for simple interest from the Math Notes box in this lesson.
Interest = Prt where:
P = Principal
r = rate
t = time
Interest = ($2500)(0.04)(12 months)
($2500)(0.04) = $100 dollars per month in interest
($100)(12 months) = $1200 interest over 12 months
How much total money does Ida owe under this option if her borrowed amount is $2500 and her interest would be $1200?
Use the same interest formula from part (a).
Interest = (principal)(interest rate)(weeks in a year)
There are 52 weeks in a year.
Ida owes $3800 with this option. Be sure to show how to get this answer and explain which one of the two loan options is better and why.