Question

Krisi took out a
$
500
discounted loan calculated using a simple interest rate of
5
%
for a period of
2
years. How much money does Krisi receive initially? Give your answer in dollars to the nearest dollar.

Answer 1

Answer:

5000

Step-by-step explanation:

To calculate the initial amount Krisi receives, we first need to determine the amount of interest accrued over the 2 years and then subtract it from the loan amount.

The formula for calculating simple interest is:

Interest = Principal × Rate × Time

Where:

- Principal → initial amount

- Rate → interest rate per period

- Time → time the money is borrowed for

Given:

- Rate = 5% = 0.05

- Time = 2 years

Now, we can plug in these values into the formula:

Interest = Principal × Rate × Time

500 = Principal × 0.05 × 2

Solving for Principal:

Principal = 500 / (0.05 × 2)

Principal = 500 / 0.10

Principal = 5000