A loan of $5000 is taken at a simple interest rate of 10% per annum. How much in

A loan of $5000 is taken at a simple interest rate of 10% per annum. How much interest will be paid after 4 years? (2000)

A loan of $5000 is taken at a simple interest rate of 10% per annum. How much interest will be paid after 4 years? (2000)

Step 1: Identify the principal amount (the initial loan). In this case, it is $5000.
Step 2: Identify the interest rate. Here, it is 10% per annum.
Step 3: Identify the time period for which the loan is taken. In this case, it is 4 years.
Step 4: Convert the interest rate from a percentage to a decimal. 10% becomes 10/100, which is 0.10.
Step 5: Use the simple interest formula: Interest = Principal * Rate * Time.
Step 6: Substitute the values into the formula: Interest = 5000 * 0.10 * 4.
Step 7: Calculate the interest: 5000 * 0.10 = 500, then 500 * 4 = 2000.
Step 8: The total interest paid after 4 years is $2000.

Simple Interest Calculation – Understanding how to calculate simple interest using the formula: Interest = Principal * Rate * Time.