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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What is the accumulated interest if a loan of $5000 is taken at a rate of 10% for 2 years?

$1000
$500
$200
$300

The correct answer is: $1000

To determine the accumulated interest on a loan of $5000 at an interest rate of 10% over 2 years, it is essential to apply the formula for simple interest, which is calculated as follows: Interest = Principal × Rate × Time In this case: - The principal amount (the initial loan) is $5000. - The interest rate is 10%, which can be expressed in decimal form as 0.10. - The time period is 2 years. Substituting these values into the formula yields: Interest = $5000 × 0.10 × 2 Interest = $5000 × 0.20 Interest = $1000 This means that the accumulated interest over the 2 years is $1000. Thus, the total amount of interest accrued during this time period accurately reflects the simple interest calculation based on the given parameters of the loan.