Rondell's parents borrow $6,300 from a bank to buy a new car. The bank charges 6% simple interest per year on this car loan. If they take 2 years to repay the loan in full, how much simple interest will they pay in total over the 2 year period?

Introduction / Context:
This question models a basic car loan with simple interest. Many entry level aptitude tests and banking exams include similar items to check whether candidates can compute the total interest on a loan when given the principal, the annual simple interest rate, and the term in years. The calculation is straightforward but must be carried out with care, especially when interpreting the interest as a separate cost on top of the original loan amount.

Given Data / Assumptions:

Loan principal P = $6,300
Annual simple interest rate R = 6 percent per annum
Loan term T = 2 years
Interest is calculated using simple interest, not compound interest
No part repayments that affect the interest calculation are considered

Concept / Approach:
Simple interest on a loan can be computed using the standard formula:
I = P * R * T Here I is the interest, P is the principal, R is the annual rate in decimal, and T is the time in years. Once I is obtained, it represents the total extra amount that Rondell's parents must pay to the bank over and above the principal. The question asks only for the interest, not the overall repayment amount that includes principal plus interest.

Step-by-Step Solution:
Step 1: Convert the annual rate into decimal form. R = 6 percent = 6 / 100 = 0.06. Step 2: Identify the principal and time. P = 6,300 dollars and T = 2 years. Step 3: Apply the simple interest formula. I = P * R * T = 6,300 * 0.06 * 2. Step 4: Compute 6,300 * 0.06 = 378 dollars per year. Step 5: Multiply by 2 years to obtain total interest. I = 378 * 2 = 756 dollars.

Verification / Alternative check:
A simple mental check is to note that 6 percent of 6,300 is slightly more than 5 percent of 6,300. Five percent of 6,300 is 315 dollars, and 1 percent is 63 dollars, so 6 percent is 315 + 63 = 378 dollars per year. Over two years, the interest doubles to 756 dollars. This reasoning matches the formal calculation and confirms that the answer is consistent.

Why Other Options Are Wrong:
Option $556 is too low and would correspond to a rate lower than 6 percent or a shorter term than 2 years. Option $665 is closer but still underestimates the interest compared to 378 dollars per year. Option $856 is higher than the correct value and would require a higher rate or a longer loan duration. Only 756 dollars matches the product of 6 percent per year for 2 years on 6,300 dollars.

Common Pitfalls:
A common error is to miscalculate 6 percent of 6,300, for example by incorrectly shifting the decimal point. Another mistake is to forget that the time is 2 years and to multiply only once by the annual interest. Some test takers mistakenly add the interest to the principal and choose that sum as the answer, even though the question asks only for the interest amount. Carefully reading what is asked and properly applying the formula avoids these issues.

Final Answer:
The total simple interest paid over the 2 year car loan is $756.