Question

Compute the interest on a loan of 800 at 5% interest rate for 6 months simple interest.

Answer 1

The interest is given by:

`I=Prt\text{ }`

where P is the principal, r is the interest rate in decimal form and t is the time.

In this case the principal is $800, the interest rate is 0.05 and the time is 0.5 years (six months is half a year), then the interest is:

`\begin{gathered} I=(800)(0.05)(0.5) \\ I=20 \end{gathered}`

Therefore the interest gained is $20