A borrower received TZS 10,000,000 from a bank at a simple interest rate of 8% per year for 2 years. Calculate the total amount playable

Economics

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Answer

TZS 11,600,000\text{TZS 11,600,000}

Step-by-step solution

3 steps

  1. Identify the given values.

    The principal amount (P) is TZS 10,000,000.
    The annual simple interest rate (R) is 8%, which is 0.08 in decimal form.
    The time period (T) is 2 years.

  2. Calculate the simple interest (I).

    The formula for simple interest is:

    I=P×R×TI = P \times R \times T

    Substitute the given values:

    I=10,000,000×0.08×2I = 10,000,000 \times 0.08 \times 2 I=800,000×2I = 800,000 \times 2 I=1,600,000I = 1,600,000

    The simple interest for 2 years is TZS 1,600,000.

  3. Calculate the total amount payable (A).

    The total amount payable is the sum of the principal amount and the simple interest:

    A=P+IA = P + I

    Substitute the values:

    A=10,000,000+1,600,000A = 10,000,000 + 1,600,000 A=11,600,000A = 11,600,000

    The total amount payable after 2 years is TZS 11,600,000.

    The total amount payable is TZS 11,600,000\text{TZS 11,600,000}.

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