Question

louis borrowed $500 from his bank. his bank will charge louis 8% simple interest per year to loan him the money. if he paid back the total amount he owed the bank, including interest, in 6 months, how much should he have paid?
○ $20
○ $40
○ $520
○ $540

Explanation:

Step1: Recall Simple Interest Formula

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.

Step2: Identify Values

Given $P = \$500$, $r = 8\% = 0.08$, and $t = 6$ months $= \frac{6}{12} = 0.5$ years.

Step3: Calculate Interest

Substitute values into the formula: $I = 500 \times 0.08 \times 0.5 = 20$.

Step4: Calculate Total Amount Owed

Total amount $A = P + I = 500 + 20 = 520$.

Answer:

$\$520$ (corresponding to the option with $\$520$)