Question

What is the simple interest on a loan of $4,000 at a 3% interest rate for 5 years?

Answer 1

What is the simple interest on a loan of $4,000 at a 3% interest rate for 5 years?​

we know that

The simple interest formula is equal to

`A=P\mleft(1+rt\mright)`

where

A is the Final Value

P is the Principal amount of money

r is the rate of interest

t is Number of Time Periods

in this problem we have

P=$4,000

r=3%=3/100=0.03

t=5 years

Find the value of A

`\begin{gathered} A=4,000(1+0.03\cdot5) \\ A=\$4,600 \end{gathered}`

Find out the interest

I=A-P

so

I=4,600-4,000

I=$600

the answer is $600