Question

if the principal amount is $500, the interest rate is 5%, and the time period is 3 years, what is the simple interest?

Answer 1

The simple interest on a principal amount of $500 at an interest rate of 5% over 3 years is $75, calculated using the formula Interest = Principal × rate × time.

Step-by-step explanation:

To calculate the simple interest, you can use the formula Interest = Principal × rate × time. In this case, the principal amount is $500, the interest rate is 5% (which is 0.05 as a decimal), and the time period is 3 years.

So, the calculation for simple interest would be:

• Interest = $500 × 0.05 × 3
• Interest = $500 × 0.15
• Interest = $75

Therefore, the simple interest earned over 3 years would be $75.