Future Business Leaders of America (FBLA) Business Calculations Practice Test

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Dive into the FBLA Business Calculations Test. Sharpen your analytical skills with multiple-choice questions and gain insights with detailed explanations. Excel in your exams!

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If you borrow $700 at a 5% interest rate, what will the interest be after two years?

The correct answer is: $70

To determine the amount of interest accrued on a loan of $700 at a 5% interest rate over two years, you can use the formula for simple interest, which is: Interest = Principal × Rate × Time In this case: - Principal is $700 - Rate is 5%, which can be expressed as 0.05 in decimal form - Time is 2 years Plugging these values into the formula: Interest = $700 × 0.05 × 2 Calculating this step-by-step: 1. Calculate the interest per year: $700 × 0.05 = $35 2. Since the interest accumulates for two years, multiply the annual interest by 2: $35 × 2 = $70 Thus, the total interest after two years is $70. This matches the option identified, which is correct, as it accurately reflects the calculation of simple interest over the specified duration.