If a person borrows $1000 at a simple interest rate of 6% per annum, how much in

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Question: If a person borrows $1000 at a simple interest rate of 6% per annum, how much interest will he pay after 4 years?

Options:

Correct Answer: $280

Solution:

Simple Interest = 1000 × 6 × 4 / 100 = $240.

If a person borrows $1000 at a simple interest rate of 6% per annum, how much interest will he pay after 4 years?

If a person borrows $1000 at a simple interest rate of 6% per annum, how much interest will he pay after 4 years?

Step 1: Identify the principal amount (the amount borrowed). In this case, it is $1000.
Step 2: Identify the interest rate. Here, it is 6% per annum.
Step 3: Identify the time period for which the money is borrowed. In this case, it is 4 years.
Step 4: Use the simple interest formula: Simple Interest = Principal × Rate × Time / 100.
Step 5: Plug in the values: Simple Interest = 1000 × 6 × 4 / 100.
Step 6: Calculate the interest: 1000 × 6 = 6000, then 6000 × 4 = 24000, and finally 24000 / 100 = 240.
Step 7: The total interest paid after 4 years is $240.

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