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Math  /  Numbers & Operations

QuestionIf you borrow $500\$ 500 for 6 years at an annual interest rate of 7%7 \%, how much will you pay altogether? \$[?]

Studdy Solution

STEP 1

1. The interest rate given is an annual interest rate.
2. The loan is a simple interest loan, meaning interest is calculated using the principal amount only.
3. The formula for calculating simple interest is I=P×r×t I = P \times r \times t , where I I is interest, P P is principal, r r is the annual interest rate, and t t is the time in years.
4. The total amount to be paid back, A A , includes both the principal and the interest.

STEP 2

1. Calculate the interest accrued over 6 years.
2. Calculate the total amount to be paid by adding the interest to the principal.

STEP 3

Use the simple interest formula to calculate the interest accrued over 6 years.
I=P×r×t I = P \times r \times t
Given P=500 P = 500 dollars, r=0.07 r = 0.07 (7%), and t=6 t = 6 years, substitute these values into the formula:
I=500×0.07×6 I = 500 \times 0.07 \times 6

STEP 4

Perform the multiplication to find the interest.
I=500×0.07×6=500×0.42=210 I = 500 \times 0.07 \times 6 = 500 \times 0.42 = 210

STEP 5

Calculate the total amount to be paid back by adding the interest to the principal.
A=P+I A = P + I

STEP 6

Substitute the values of the principal P P and the interest I I into the equation to find the total amount.
A=500+210=710 A = 500 + 210 = 710
The total amount to be paid altogether is \$710.

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