If Howard takes out a $400 loan for one year at 5 percent interest annually, he will pay back a total of:
A) $400.
B) $440.
C) $420.
D) $20.

Question

Quizplus · Accepted Answer

To find out how much Howard will pay back in total, we need to add the original loan amount ($400) to the interest earned. The formula for simple interest is:

Interest = Principal x Rate x Time

In this case, Principal = $400, Rate = 5% (as a decimal, 0.05), and Time = 1 year. Plugging these values into the formula:

Interest = $400 x 0.05 x 1 = $20

So the total amount Howard will pay back is:

$400 + $20 = $420

Therefore, the answer is choice C.

If Howard Takes Out a $400 Loan for One Year