Question

if you borrow $700 for 2 years at an annual interest rate of 5%, what is the total amount of money you will pay back?

Explanation:

Step1: Calculate the simple interest

The formula for simple interest is $I = P \times r \times t$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal), and $t$ is the time in years.
Given $P = 700$, $r = 5\% = 0.05$, and $t = 2$.
So, $I = 700 \times 0.05 \times 2$.
$I = 700 \times 0.1 = 70$.

Step2: Calculate the total amount to pay back

The total amount $A$ is the sum of the principal and the interest, so $A = P + I$.
Substituting the values, $A = 700 + 70 = 770$.

Answer:

The total amount of money to pay back is $\$770$.