A loan of $5000 is taken for 4 years at a simple interest rate of 7%. What will

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Question: A loan of $5000 is taken for 4 years at a simple interest rate of 7%. What will be the total interest paid?

Options:

Correct Answer: $1400

Solution:

Simple Interest = 5000 × 7 × 4 / 100 = $1400.

A loan of $5000 is taken for 4 years at a simple interest rate of 7%. What will be the total interest paid?

A loan of $5000 is taken for 4 years at a simple interest rate of 7%. What will be the total interest paid?

Step 1: Identify the principal amount (the initial loan amount). In this case, it is $5000.
Step 2: Identify the interest rate. Here, it is 7%.
Step 3: Identify the time period for the loan. This loan is for 4 years.
Step 4: Use the simple interest formula: Simple Interest = Principal × Rate × Time / 100.
Step 5: Plug in the values: Simple Interest = 5000 × 7 × 4 / 100.
Step 6: Calculate the multiplication: 5000 × 7 = 35000, then 35000 × 4 = 140000.
Step 7: Divide by 100: 140000 / 100 = 1400.
Step 8: The total interest paid over 4 years is $1400.

Simple Interest Calculation – Understanding how to calculate simple interest using the formula: Interest = Principal × Rate × Time / 100.