2) john is offered a loan of $500 for 4 years at a 5% simple interest rate. how much interest will he pay?
2) john is offered a loan of $500 for 4 years at a 5% simple interest rate. how much interest will he pay?
Answer
Explanation:
Step1: Identify the simple - interest formula
The formula for simple interest is $I = Prt$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years.
Step2: Convert the interest rate to decimal
The annual interest rate $r = 5%=0.05$. The principal amount $P = 500$ and the time $t = 4$ years.
Step3: Substitute values into the formula
$I=Prt=500\times0.05\times4$.
Step4: Calculate the interest
$I = 500\times0.05\times4=100$.
Answer:
$100$