Question

1. John borrows $100 dollars from Ed. They agree that John will pay back the loan in two months at a rate of 10 percent monthly. If John pays back exactly $120, then the interest was:

A. compounded

B. simple

C. usurious

D. Impounded

2. Fred receives a loan for $10,000 that must be repaid in three years. The rate of interest is 5 percent. If the amount of interest that must be repaid is greater than $1,500, what type of interest is Fred paying?

A. simple

B. usury

C. compound

D. articulate

Answer 1

I know this is not exactly math but I was wondering if anyone could help me. Thank you!

Answer 2

1 is A. Simple interest

Answer 3

2 is C compound interest

Answer 4

oh ok thank you :)

Answer 5

you're welcome

Answer 6

Would you mind explaining?

Answer 7

Simple interest is determined by multiplying the interest rate by the principal by the number of periods. For example if a bank charges "Simple Interest" then you just pays another 10% for the extra year. That is how simple interest works, you pay the same amount of interest every year.