Question

The total amount A in an account earning simple interest is given by the equation A = P + Prt, where P is the principal, r is the rate as a decimal, and t is time in years.

Holly earns 4% simple interest over 5 years. Which equation represents the amount in Holly's account in terms of the principal?

(A) A = P + 2P

(B) A = 5P + 0.04P

(C) A = P + 0.2P

(D) A = 0.04P + 5P

Plz help!

Answer 1

P is a placeholder for the amount of money you put in (aka deposit). We don't know the value of P, so it stays unknown.

The r is the interest rate as a decimal. It is also a placeholder, but we know that r = 0.04 because we're told the interest rate is 4%. Note that 4% = 4/100 = 0.04

The time in years is t = 5

So this means...
A = P + P*r*t
A = P + P*0.04*t ... replace r with 0.04
A = P + P*0.04*5 ... replace t with 5
A = P + P*0.2 ... multiply
A = P + 0.2*P ... swap terms
A = P + 0.2P

Answer is choice C