Question

Ariane borrows $200 on a 2−year loan. She is charged 5% simple interest per year. How much interest is she charged for 2 years? What is the total amount she has to pay back?

Answer 1

Answer:

Interest charged over two years: $20

Total amount: $220

Step-by-step explanation:

The formula for simple interest is A = P ( 1 + rt ).

A = 200 ( 1 + (0.05 * 2))

A is the total amount ( interest + principle )

A = 220

P is the principle ( initial amount deposited )

P = 200

R refers to rate (in percent)

R = 0.05

T = time period (in years)

T = 2