Question

What is the simple interest accrued on a principal amount of $28,000 at an annual interest rate of 3.5% for a period of 6 months?

A) $245
B) $490
C) $4900
D) $2450

Answer 1

B) $490. To calculate the simple interest accrued on a principal amount, use the formula: Simple Interest = Principal × Rate × Time. In this case, the simple interest accrued would be $490.

Step-by-step explanation:

To calculate the simple interest accrued on a principal amount, we can use the formula:

Simple Interest = Principal × Rate × Time

In this case, the principal amount is $28,000, the annual interest rate is 3.5%, and the time period is 6 months. We need to convert the interest rate and time period to match the units of the principal amount. We divide the interest rate by 100 to convert it to decimal form and divide the time period by 12 to convert it to years:

Simple Interest = $28,000 × 0.035 × (6/12)

Simplifying the expression gives us:

Simple Interest = $490

Therefore, the simple interest accrued on a principal amount of $28,000 at an annual interest rate of 3.5% for a period of 6 months is $490.