Question

Krisi took out a $500 discounted loan calculated using a simple interest rate of 5% for a period of 2 years. How much money does Krisi receive initially? Give your answer in dollars to the nearest dollar.

Answer 1

Answer:

$455

Step-by-step explanation:

The computation of the principal is shown below:

As we know that

Amount = Simple interest + Principal

Let us assume the principal be X

So,

Amount = $500

Simple interest = Principal × rate of interest × time period

                         = X × 5% × 2 years

                         = X × 0.1

So, the principal is

$500 =  X × 0.1 + X

$500 = 1.1 × X

So, the X is $455 i.e principal

     

Answer 2

Answer:

Step-by-step explanation:

o calculate the total interest payable, we use the formula

I=Prt,

and substituting our values yields

I=$500×0.05×2=$50.

Therefore the total amount she receives at loan drawdown is $500−$50=$450.