Question

If you borrow $100 at 10 percent simple annual interest and repay it in one lump sum at the end of one year, you will have to pay:

1) $100
2) $105
3) $110
4) $115

Answer 1

If you borrow $100 at a 10 percent simple annual interest rate and repay it after one year, you will have to repay $110, which includes the initial amount plus $10 of interest.

Step-by-step explanation:

If you borrow $100 at 10 percent simple annual interest and repay it in one lump sum at the end of one year, you will have to repay the initial amount plus the interest earned over the year. Simple interest can be calculated using the formula I = PRT, where I is the interest, P is the principal amount (the initial amount of money), R is the interest rate, and T is the time in years. In your case, P is $100, R is 0.10 (10 percent expressed as a decimal), and T is 1 year.

So the interest would be calculated as follows:
I = PRT = $100 × 0.10 × 1 = $10

Therefore, the total amount to be repaid is the principal plus the interest, which is:
$100 + $10 = $110.

So the correct answer is that you will need to repay $110 at the end of one year.