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Question

Simple Interest: You borrow $2,000 for car repairs. The interest rate is 5%, and you will pay it in full one year later

Answer 1

When you know the principal amount, the rate and the time. The amount of interest can be calculated by using the formula:  I = Prt

 

In using this STANDARD FORMULA we substitute in the given values and then calculate accordingly.  So it should look like this:

 

I (interest) = P (principal amount) X r (rate) X t (time)

I               =  (2000)                   X (5/100) X   (1 )

I               =  100

 

Therefore you should pay $100 dollars in interest on a $2,000 car repair loan.