Step 1 :The problem is asking for the interest earned on a loan. The formula to calculate the interest is: \(Interest = Principal * Rate * Time\)
Step 2 :Where: \(Principal\) is the initial amount of the loan, which is \$5000 in this case. \(Rate\) is the annual interest rate, which is 1.25\% or 0.0125 in decimal form. \(Time\) is the duration of the loan in years. Since the loan is for 18 months, this would be \(\frac{18}{12} = 1.5\) years.
Step 3 :We can plug these values into the formula to calculate the interest: \(Interest = 5000 * 0.0125 * 1.5\)
Step 4 :The calculation gives us the interest earned on a loan of \$5000 at an annual interest rate of 1.25\% for a period of 18 months is \$93.75.
Step 5 :Final Answer: The interest earned is \(\boxed{93.75}\)