clarissa needs a $2,500 loan in order to buy a car. which loan option would allow her to pay the least…

Explanation:

Step1: Recall simple - interest formula

The simple - interest formula is $I = Prt$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years. Here, $P=$2500$.

Step2: Convert months to years and find interest for Option A

$t_A=\frac{18}{12}=1.5$ years, $r_A = 0.0475$. Then $I_A=P\times r_A\times t_A=2500\times0.0475\times1.5=$178.125$.

Step3: Convert months to years and find interest for Option B

$t_B=\frac{30}{12}=2.5$ years, $r_B = 0.04$. Then $I_B=P\times r_B\times t_B=2500\times0.04\times2.5=$250$.

Step4: Convert months to years and find interest for Option C

$t_C=\frac{24}{12}=2$ years, $r_C = 0.0425$. Then $I_C=P\times r_C\times t_C=2500\times0.0425\times2=$212.5$.

Step5: Convert months to years and find interest for Option D

$t_D=\frac{36}{12}=3$ years, $r_D = 0.045$. Then $I_D=P\times r_D\times t_D=2500\times0.045\times3=$337.5$.

Answer:

A. An 18 - month loan with a 4.75% annual simple interest rate