The interest charged for 3 years would be $75 ($500 x 0.05 x 3). The total amount Ariane has to pay back would be $575 ($500 + $75).
Simple interest is calculated based on the principal of a loan or the initial deposit into a savings account. Simple interest doesn't compound, therefore a creditor will only charge interest on the principal sum, and a borrower will never be required to pay interest on interest that has already accrued.
To calculate simple interest, multiply the principal sum by the time period, interest rate, and time period. Simple interest is calculated as follows: "Simple Interest = Principal x Interest Rate x Time." This equation provides the simplest method for calculating interest.
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