5.1) A loan of \( R 2500 \) is taken out at a simple interest rate of \( 7 \% \) per annum. If the loan is for period of 4 years, how much money must be repaid at the end of a period of 4 years?

To calculate the total amount that must be repaid at the end of 4 years, we first need to determine the simple interest. The formula for simple interest is: \[ \text{Interest} = P \times r \times t \] Where: - \( P = R 2500 \) (the principal amount) - \( r = 0.07 \) (the interest rate) - \( t = 4 \) (the time in years) Calculating the interest: \[ \text{Interest} = 2500 \times 0.07 \times 4 = R 700 \] Now, to find the total amount to be repaid, we add the interest to the principal: \[ \text{Total Repayment} = P + \text{Interest} = 2500 + 700 = R 3200 \] So, at the end of 4 years, the total amount to be repaid is \( R 3200 \). --- The concept of simple interest has roots going back thousands of years, used by ancient civilizations like the Babylonians and Egyptians for trade and agriculture. They recognized the value of lending and borrowing, laying the groundwork for our current financial systems! In real life, understanding simple interest is crucial when dealing with loans or investment accounts. Many personal loans, car loans, and short-term financial products use simple interest to calculate how much you owe over time. This means you can easily project costs and plan your budget accordingly, ensuring you're financially prepared!