Question

Annie gets a loan from her bank .She agrees yo borrow 8000 pounds at a fixed annual simple interest rate of 6%. She also agrees to pay the loan back over a 10 year period. How much money in total will she have paid back at the end of 10 years

Answer 1

Annie paid 12800 pounds at end of 10 years

Solution:

Given that Annie borrows 8000 pounds at simple interest rate of 6 %

She also agrees to pay the loan back over a 10 year period

To find: total money paid back at the end of 10 years

The total amount paid is given as:

Total amount = simple interest + principal amount borrowed

The simple interest is given as:

$S.I = \frac{pnr}{100}$

Where, "p" is the principal sum

"n" is the number of years

"r" is the rate of interest

Here, p = 8000 ; r = 6 % ; n = 10 years

$S.I = \frac{8000 \times 10 \times 6}{100}\\\\S.I = 4800$

Therefore total amount paid at end of 10 years is:

Total amount = 4800 + 8000 = 12800

Thus Annie paid 12800 pounds at end of 10 years