1. Determine the principal amount borrowed.
2. Find the interest rate (usually annual).
3. Identify the loan term (in years).
4. Calculate the total interest by multiplying the principal, interest rate, and loan term.
5. Add the total interest to the principal to get the total amount paid back.
For example, if someone borrows $10,000 at 5% interest for 3 years:
Principal: $10,000
Interest Rate: 5% (0.05)
Loan Term: 3 years
Total Interest: $10,000 * 0.05 * 3 = $1,500
Total Amount Paid Back: $10,000 + $1,500 = $11,500
