What is the annual interest amount for a $225,000 loan at an interest rate of 4.95% over a period of 3 years?

To determine the annual interest amount for a loan, the formula used is:

Annual Interest = Principal × Interest Rate.

In this scenario, the loan amount (the principal) is $225,000, and the annual interest rate is 4.95%. To find the annual interest, you would calculate:

Annual Interest = $225,000 × 0.0495 = $11,137.50.

This value represents the annual interest amount. However, since the question asks for the total interest over a period of 3 years, you would then multiply this annual interest by the number of years:

Total Interest for 3 Years = Annual Interest × 3 = $11,137.50 × 3 = $33,412.50.

There might be a mistake in the calculation for the initially provided answer, as the correct total interest over the specified period of 3 years is $33,412.50. The choices provided do not seem to reflect that, suggesting that the correct computations lead to a different total compared to the answer indicated.

It's essential to check calculations while considering the entire tenure of the loan, as the interest accumulates over multiple years, impacting the overall payment. The substantial difference hints that the response should have