To calculate the simple interest Jim owes the bank, we need to use the formula:
Simple Interest = Principal x Rate x Time
Where:
- Principal = $2,000 (the amount borrowed)
- Rate = 7% (as a decimal, this is 0.07)
- Time = 1 year
So,
Simple Interest = $2,000 x 0.07 x 1
Simple Interest = $140
This means that Jim owes the bank $140 in interest.
To calculate the total amount Jim has to pay to the bank, we simply add the interest to the principal:
Total Amount = Principal + Simple Interest
Total Amount = $2,000 + $140
Total Amount = $2,140
Therefore, Jim has to pay the bank a total of $2,140.