A person borrows $5000 at a rate of 8% per annum for 4 years. What is the total

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Question: A person borrows $5000 at a rate of 8% per annum for 4 years. What is the total amount to be paid back?

Options:

Correct Answer: $6400

Solution:

Total Amount = Principal + Simple Interest = 5000 + (5000 * 8 * 4) / 100 = 5000 + 1600 = $6600.

A person borrows $5000 at a rate of 8% per annum for 4 years. What is the total amount to be paid back?

A person borrows $5000 at a rate of 8% per annum for 4 years. What is the total amount to be paid back?

Step 1: Identify the principal amount borrowed. In this case, it is $5000.
Step 2: Identify the annual interest rate. Here, it is 8%.
Step 3: Identify the time period for which the money is borrowed. This is 4 years.
Step 4: Calculate the simple interest using the formula: Simple Interest = (Principal * Rate * Time) / 100.
Step 5: Plug in the values: Simple Interest = (5000 * 8 * 4) / 100.
Step 6: Calculate the simple interest: (5000 * 8 * 4) = 160000, then divide by 100 to get 1600.
Step 7: Add the simple interest to the principal to find the total amount to be paid back: Total Amount = Principal + Simple Interest.
Step 8: Calculate the total amount: Total Amount = 5000 + 1600 = 6600.

Simple Interest Calculation – Understanding how to calculate simple interest using the formula: Interest = Principal x Rate x Time.
Total Amount Calculation – Combining principal and interest to find the total amount to be repaid.