ACT Math · Ratios, rates, and percents
A $2,000 loan has 5% simple annual interest. What is the total amount owed after 2 years?
A $2,000 loan has 5% simple annual interest. What is the total amount owed after 2 years?
Answer and explanation
Answer: H: $2,200
Simple interest is dollars. The total owed is the principal plus the interest: dollars, choice H. Choice G ($2,100) is the amount after only one year. Choice F ($2,050) is one year's interest on a smaller base. Choice J ($2,205) uses compound interest, , in which the second year's interest is earned on the first year's interest as well. The problem says simple interest, so the interest is the same every year.
More Ratios, rates, and percents questions
- Question 13The distance a spring stretches varies directly with the weight attached to it. A weight of 5…
- Question 35A jacket originally priced at $80 is marked up 15%, then later marked down 20% from the new price.…
- Question 36A car travels 250 miles using 10 gallons of gas, then travels 180 miles using 6 gallons. What is…
- Question 37An account earns simple interest at an annual rate of 4%. If $2,000 is deposited and left for 3…
- Question 38A recipe uses 3/4 cup of flour to make 12 cookies. How many cups of flour are needed to make 30…
- Question 39A painter can paint a room alone at a rate of 1/5 of the room per hour. After working alone for 2…
Learn the method behind questions like this one
The ACT Math course teaches each tested skill through lessons, step-by-step solutions to sample problems, the complete study guide and full-length practice tests.