Answer:
Option D. $2520 is correct
Step-by-step explanation:
Principal value = $7890
Rate of interest = 11.5 annually
[tex]\text{Monthly Rate of Interest = }\frac{11.5}{12}=0.96\%=0.0096[/tex]
Time = 5 years
⇒ n = 60 months
[tex]\text{Monthly Payment = }\frac{rate\times \text{Principal value}}{1-(1+r)^{-n}}\\\\\text{Monthly payment = }\frac{0.0096\times 7890}{1-(1+0.0096)^{-60}} \\\\\implies\text{Monthly Payment = }\$173.50[/tex]
Total payment made by Arnold = No. of months × Monthly Payment
⇒ Total Payment = 60 × 173.50
⇒ Total Payment = $10410
Money borrowed = $7890
Hence, Amount of interest = Total payment - Amount borrowed
⇒ Interest = 10410 - 7890
⇒ Interest = $2520
Therefore, Option D. $2520 is correct
