Final answer:
The question involves financial mathematics, focusing on simple interest and simple discount calculations. Examples include finding the total interest on a loan given the principal, rate, and time, and determining the interest rate from the interest earned over a period.
Step-by-step explanation:
The subject of the question is determining the value of financial instruments using simple interest and simple discount methods, as well as calculating present value based on different discount rates. This is a typical problem in financial mathematics, often covered in high school or college-level courses.
Example Calculation for Simple Interest
For example, for a $5,000 loan at a simple interest rate of 6% over three years, the total interest would be calculated as:
$5,000 × 6% × 3 = $900
Determining the Interest Rate
The interest rate charged on a loan from which $500 in simple interest was earned on a $10,000 loan over five years can be calculated using the formula:
Interest = Principal × Rate × Time
$500 = $10,000 × Rate × 5
Rate = $500 / ($10,000 × 5) = 0.01 or 1%