Question

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Answer 1

We have been given that Anil borrows $80 000 to buy a business.  The bank gives him a loan, with an interest rate of 2% each year. We are asked to find the total amount paid back by Anil to bank after 10 years.

We will use simple interest formula to solve our given problem.

$A=P(1+rt)$, where,

A = Final amount,

P = Principal amount,

r = Annual interest rate in decimal form,

t = Time in years.

Let us convert 2% into decimal.

$2\%=\frac{2}{100}=0.02$

We have $P=\ 80,000$ and $t=10$, so we will get:

$A=\ 80000\left(1+0.02\cdot 10\right)$

$A=\ 80000(1+0.2)$

$A=\ 80000(1.2)$

$A=\ 96,000$

Therefore, Anil will pay $\ 96,000$ to the bank after 10 years.