A loan of $5000 is taken at a simple interest rate of 9% per annum. How much int

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Question: A loan of $5000 is taken at a simple interest rate of 9% per annum. How much interest will be paid after 2 years?

Options:

Correct Answer: $900

Solution:

Simple Interest = (5000 × 9 × 2) / 100 = $900.

A loan of $5000 is taken at a simple interest rate of 9% per annum. How much interest will be paid after 2 years?

A loan of $5000 is taken at a simple interest rate of 9% per annum. How much interest will be paid after 2 years?

Step 1: Identify the principal amount (the initial loan), which is $5000.
Step 2: Identify the interest rate, which is 9% per annum.
Step 3: Identify the time period for the loan, which is 2 years.
Step 4: Use the simple interest formula: Simple Interest = (Principal × Rate × Time) / 100.
Step 5: Plug in the values: Simple Interest = (5000 × 9 × 2) / 100.
Step 6: Calculate the multiplication: 5000 × 9 = 45000, then 45000 × 2 = 90000.
Step 7: Divide by 100: 90000 / 100 = 900.
Step 8: The total interest paid after 2 years is $900.

Simple Interest – The calculation of interest based on the principal amount, the interest rate, and the time period.