The simple interest formula is i = P*r*t where i = interest P = is the amount borrowed r = interest rate in decimal form t = time in years
In this case, i = unknown P = 12500 r = 0.052 (equivalent to 5.2%) t = 4
So, i = P*r*t i = 12500*0.052*4 i = 2600 Which means $2,600 in simple interest is charged on the amount borrowed. You have to pay this amount on top of the $12,500 borrowed.
In total, you have to pay back P+i = 12500+2600 = 15100 which is the final answer
