If an individual borrows $100 at an annual rate of interest of 5 percent,how much interest will he have to pay at the end of 1 year?

Question

Quizplus · Accepted Answer

To calculate the interest, we can use the simple interest formula: 
Interest = Principal x Rate x Time

Here, the principal is $100, the rate is 5%, and the time is 1 year. 
Plugging in the values: 
Interest = 100 x 0.05 x 1 
Interest = $5

Therefore, the individual will have to pay $5 in interest at the end of 1 year. Thus, the correct answer is A).

If an Individual Borrows $100 at an Annual Rate of Interest