Question

A person loans his friend $500. They agree to an annual interest rate of 5%. Write (type) an expression for computing the amount owed on the loan, in dollars, after t years if no payments are made.

Answer 1

A = 500(1 +0.05t)

Explanation:

You want an expression for the amount owed on a loan of $500 earning 5% interest.

Owed

The amount owed can be found using the formula for an amount earning simple interest:

A = P(1 +rt) . . . . . . . P is the principal amount, r is the interest rate, t is years

Using the given values, the expression becomes ...

A = 500(1 +0.05t)

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