If the amount payable in two years is $2,420 for a simple loan at 10 percent interest,the loan amount is
A)$1,000.
B)$1,210.
C)$2,000.
D)$2,200.

Question

Quizplus · Accepted Answer

The formula for simple interest is $I = P \times r \times t$, where $I$ is the interest, $P$ is the principal amount (initial loan amount), $r$ is the annual interest rate, and $t$ is the time in years. The amount payable, $A$, is the sum of the principal and the interest: $A = P + I$. Given $A = $2,420$, $r = 10\% = 0.10$, and $t = 2$ years, we can solve for $P$. Rearranging the formula: $P = \frac{A}{1 + rt} = \frac{2420}{1 + 0.10 \times 2} = \frac{2420}{1.20} = $2,000$.

If the Amount Payable in Two Years Is $2,420 for a Simple