Question

What is the total amount Victor must repay if he borrows $8,000 at a simple interest rate of 5% for 3 years?

A) $9,200
B) $9,600
C) $10,000
D) $10,400

Answer 1

Victor must repay a total of $9,200 for an $8,000 loan at a simple interest rate of 5% for 3 years, which includes $1,200 of interest plus the original principal.

Step-by-step explanation:

To calculate the total amount Victor must repay for an $8,000 loan at a simple interest rate of 5% for 3 years, use the formula for simple interest: Interest = Principal × Rate × Time.

First, convert the interest rate from a percentage to a decimal by dividing by 100:

5% = 0.05

Then, calculate the total interest by multiplying the principal by the rate and the time:

Interest = $8,000 × 0.05 × 3 years = $1,200

To find the total repayment amount, add the interest to the original principal:

Total repayment = Principal + Interest = $8,000 + $1,200 = $9,200

Therefore, the total amount Victor must repay is $9,200, which corresponds to option A).