Question

You borrowed $850 to purchase a new table. The rate on the loan was 5%. How much interest was earned at the end of 5 years? How much did you have to pay for the loan in total at the end of five years?

Answer 1

$1062.5 is the total amount have to be paid at the end of five years.

Explanation:

Borrowed amount is $850

Rate of loan is 5%

For 5 years

We know that,

`\text { Simple interest }=(P T R)/(100)`

`\text { Each year you would earn } 5 \% \text { interest }=(\$ 850 * 5 * 1)/(100)`

So for 5 years you would earn a total of
`42.5 * 5`

5 years you would earn a total is 212.5 interest

You would receive back the $850 you original paid

Leaving you with a total of = $850 + $212.5 = $1062.5

The total amount you have to pay loan in total five years was $1062.5.