Question

Ariane borrows $400 on a 5−year loan. She is charged 5% simple interest per year. How much interest is she charged for 5 years? What is the total amount she has to pay back? After 5 years, Ariane is charged $ in interest. She pays a total amount of $ .

Answer 1

Answer: interest = $100

Amount = $500

Explanation:

Simple interest is calculated as:

= PRT/100

where,

P = principal = $400

R = rate = 5%

T = time = 5 years

Simple interest = PRT/100

= ($400 × 5 × 5)/100

= $10,000/100

= $100

Amount paid back:

= Principal + Interest

= $400 + $100

= $500