Question

If you borrow $10,000 for 3 years at an annual interest rate of 5% what is the total amount of mmoney you will pay back?

Answer 1

To calculate the total amount of money you will pay back for a loan, you can use the formula for simple interest. The formula to calculate total repayment is:

\[
\text{Total Repayment} = \text{Principal} + \text{Interest}
\]

First, calculate the interest:

\[
\text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time}
\]

Given:
- Principal = $10,000
- Rate = 5% per year = 0.05
- Time = 3 years

Substituting the values:

\[
\text{Interest} = 10,000 \times 0.05 \times 3 = 10,000 \times 0.15 = 1,500
\]

Now, calculate the total repayment:

\[
\text{Total Repayment} = 10,000 + 1,500 = 11,500
\]

So, the total amount of money you will pay back is **$11,500**.