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You owe 12% interest each year on a $500 loan. If you make no payments and take no additional loans, what will the loan balance be after 5 years? Write an expression to represent the balance and evaluate it to find the answer in dollars.

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sqdancefan

Answer:

  $800

Step-by-step explanation:

Interest on the loan is calculated using the formula ...

  I = Prt . . . . interest on principal P at rate r for t years

  I = $500×0.12×5 = $300

The balance is the sum of the principal and interest:

  B = P +I

  B = $500 +300 = $800

The balance due after 5 years is $800.