Question

1. Joanna wants to buy a car. Her parents loan her $5,000 for 5 years at 5% simple interest. How much will Joanna pay in interest? *

Answer 1

$1250

Explanation:

First, converting R percent to r a decimal

r = R/100 = 5%/100 = 0.05 per year,

then, solving our equation

I = 5000 × 0.05 × 5 = 1250

I = $ 1,250.00

The simple interest accumulated

on a principal of $ 5,000.00

at a rate of 5% per year

for 5 years is $ 1,250.00.