A simple interest loan with Principal $1,000, rate 5% per year for 2 years. What is the total amount payable at the end?

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Multiple Choice

A simple interest loan with Principal $1,000, rate 5% per year for 2 years. What is the total amount payable at the end?

Explanation:
Simple interest is earned on the original loan amount each year, so the interest for the whole period is I = P × r × t, and the total repayable is P + I. Here the principal is 1,000, the annual rate is 5% (0.05), and the time is 2 years. I = 1,000 × 0.05 × 2 = 100. Add that to the principal: 1,000 + 100 = 1,100. So the total amount payable is 1,100.

Simple interest is earned on the original loan amount each year, so the interest for the whole period is I = P × r × t, and the total repayable is P + I. Here the principal is 1,000, the annual rate is 5% (0.05), and the time is 2 years. I = 1,000 × 0.05 × 2 = 100. Add that to the principal: 1,000 + 100 = 1,100. So the total amount payable is 1,100.

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