To calculate simple interest, you can use the formula:
Simple Interest(SI)=P×R×T
where:
- P is the principal amount (the initial amount of money),
- R is the rate of interest per time period, and
- T is the time the money is invested or borrowed for.
In this case, you've provided
P=$340,
R=4%, and
T=1 year.
Plugging these values into the formula, you get:
SI = 340 × (4/100) × 1
Solving this expression, you find the simple interest earned:
SI=$340×0.04×1=$13.6
Therefore, the simple interest earned in one year is $13.6.
Simple interest is straightforward to calculate because it is based only on the initial principal amount, the interest rate, and the time for which the money is invested or borrowed. Unlike compound interest, simple interest does not take into account any interest that accumulates on previously earned interest.
In summary, for an initial principal amount of $340, with an interest rate of 4% per year, the simple interest earned after one year is $13.6. This calculation provides a clear and easy-to-understand way to determine the interest earned over time for a given investment or loan.