Question

If $1,000 is loaned for 5 months at 6 % annual rate, how much interest is earned?

Answer 1

Interest earned is $25.2

Explanation:

The formula to find simple interest is:

I = P₀rt

Where

I = interest rate

P₀ = Principal amount

r = interest rate

t= time

5 months = 5/12 years = 0.42 years

I = 1000* 6/100*0.42

I = 1000*0.06*0.42

I = 60*0.42

I = 25.2

Interest earned is $25.2