To determine how much you will pay altogether when you borrow [tex]$\$[/tex]500[tex]$ for 3 years at an annual interest rate of $[/tex]5\%[tex]$, we will follow these steps:
1. Identify the given values:
- Principal (\(P\)) = $[/tex]500
- Annual Interest Rate ([tex]\(R\)[/tex]) = 5\% (or 0.05 as a decimal)
- Time ([tex]\(T\)[/tex]) = 3 years
2. Calculate the total interest accrued over the period:
- The formula for simple interest is: [tex]\( I = P \times R \times T \)[/tex]
- Plugging in the given values:
[tex]\( I = 500 \times 0.05 \times 3 \)[/tex]
3. Calculate the total interest:
- After performing the multiplication:
[tex]\( I = 500 \times 0.05 \times 3 = 75 \)[/tex]
Therefore, the total interest accrued after 3 years is \[tex]$75.
4. Calculate the total amount to be paid:
- The total amount is the sum of the principal amount and the total interest.
- Total payment \( = P + I \)
- Plugging in the values:
\( \text{Total payment} = 500 + 75 = 575 \)
Hence, after 3 years, you will pay altogether $[/tex]575.
