Question

The formula to compute simple interest is I = prt, where I is the interest earned in dollars, p is the principal invested in dollars, r is the rate at which it is invested, and t is the time in years of the investment. If Pat invests $500 at 4% for 3 years, how much interest will he earn?

A) $600
B) $120
C) $50
D) $60

Answer 1

To compute the simple interest, the formula I = prt is applied. For Pat's $500 invested at 4% for 3 years, the interest is calculated as I = $500 × 0.04 × 3, which equals $60.

Step-by-step explanation:

To calculate the simple interest that Pat will earn, we can use the formula I = prt, where I is the interest, p is the principal amount, r is the annual interest rate (in decimal form), and t is the time in years. For Pat's investment:

• Principal (p): $500
• Rate (r): 4% or 0.04 (since 4% = 4/100 = 0.04)
• Time (t): 3 years

Now, we apply these values to the formula:

I = prt = $500 × 0.04 × 3

Calculating this gives us:

I = $500 × 0.12 = $60

Therefore, Pat will earn $60 in simple interest after 3 years.