Your rich Uncle Ralph is willing to loan you $1000 for two years and asks that you repay your loan with simple interest at the rate of 12% per year. How much will you repay after two years?

Question

Quizplus · Accepted Answer

The simple interest formula is I = Prt, where P is the principal amount ($1000), r is the annual interest rate (12% or 0.12), and t is the time in years (2). So, I = $1000 * 0.12 * 2 = $240. The total repayment is the principal plus interest: $1000 + $240 = $1240.

Your Rich Uncle Ralph Is Willing to Loan You $1000