Question

You have loaned a friend $300 for 3 years. Your friend has agreed to pay back the loan with 20% annual simple interest. After 3 years, how much will your friend pay you back altogether (including both the principal and interest)?Give your answer to the nearest dollar. For example, if you calculate $33.27, write 33.

Answer 1

Solution:

Given:

$\begin{gathered} P=\text{ \ }300 \\ T=3years \\ R=20\text{ \%} \end{gathered}$

Using the simple interest formula;

$\begin{gathered} I=\frac{PTR}{100} \\ I=\frac{300\times3\times20}{100} \\ I=\text{ \ }180 \end{gathered}$

Hence, the amount to be paid back altogether is;

$\begin{gathered} A=P+I \\ A=300+180 \\ A=\text{ \ }480 \end{gathered}$

Therefore, the amount to be paid back altogether is $480