If you borrow $80 for 5 years at an annual interest rate of 15%, what is the total amount of money you will pay back?

1 answer

To calculate the total amount of money you will pay back after borrowing $80 for 5 years at an annual interest rate of 15%, we can use the formula for simple interest:

\[ \text{Total Amount} = P + I \]

where:

  • \( P \) is the principal amount (the initial amount borrowed),
  • \( I \) is the interest.

First, let's calculate the interest \( I \):

\[ I = P \times r \times t \]

where:

  • \( r \) is the annual interest rate (in decimal form),
  • \( t \) is the time in years.

For this problem:

  • \( P = 80 \)
  • \( r = 15% = 0.15 \)
  • \( t = 5 \)

Now we can substitute these values into the formula for interest:

\[ I = 80 \times 0.15 \times 5 \]

Now calculate \( I \):

\[ I = 80 \times 0.15 = 12 \]

\[ I = 12 \times 5 = 60 \]

So, \( I = 60 \).

Now, we calculate the total amount to be paid back:

\[ \text{Total Amount} = P + I = 80 + 60 = 140 \]

Therefore, the total amount of money you will pay back after 5 years is $140.