Charlie borrowed $5600 from a bank at a simple interest rate of 2.5% for one year. What total amount will Charlie have to repay the bank at the end of 1 year?
Charlie will repay $5740 after 1 year. Using simple interest, $I = Prt = 5600(0.025)(1) = 140$, so the total is $A = P + I = 5600 + 140 = 5740$.
What this problem is asking
You are given a principal amount, a simple interest rate, and a time of 1 year. You need the total repayment, which is the original principal plus the simple interest.
Compute the simple interest
Use the simple interest formula: $$I = Prt$$ Substitute $P = 5600$, $r = 0.025$, and $t = 1$: $$I = 5600 \cdot 0.025 \cdot 1 = 140$$
Add interest to the principal to get the total
The total amount repaid is: $$A = P + I = 5600 + 140 = 5740$$
Quick check
A $2.5\%$ increase on $5600$ is $0.025 \times 5600 = 140$, so adding it gives $5740$, which is reasonable.
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