To calculate the total amount to be paid back on a loan, you can use the formula for calculating the total amount with simple interest:
\[ \text{Total Amount} = \text{Principal} + \text{Interest} \]
Where:
- Principal is the initial amount borrowed (loan amount).
- Interest is calculated as:
\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \]
Given:
- Principal = $1200
- Rate = 7% per year = 0.07 (as a decimal)
- Time = 2 years
Now, calculating the interest:
\[ \text{Interest} = 1200 \times 0.07 \times 2 \] \[ \text{Interest} = 1200 \times 0.14 \] \[ \text{Interest} = 168 \]
Now, add the interest to the principal to find the total amount to be paid back:
\[ \text{Total Amount} = 1200 + 168 = 1368 \]
So, the total amount that you will pay back is $1368.
The correct answer is $1368.
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