Final answer:
Joe borrowed $900 for six months at a simple interest rate of 4 percent. Applying the simple interest formula (Interest = Principal × rate × time), Sam will earn $18 in interest from this loan.
Step-by-step explanation:
Calculating Simple Interest for Joe's Loan
The formula to calculate simple interest is given by Interest = Principal × rate × time. In this scenario, Joe borrowed $900 from Sam at a simple interest rate of 4 percent for six months. To find out how much Sam will earn in interest, we apply the formula:
Interest = $900 × 4% × 0.5 years
Since the interest rate should be in decimal form, we convert 4 percent to a decimal by dividing by 100:
Interest = $900 × 0.04 × 0.5
The time of six months is expressed in years as half a year or 0.5. Using these values, we calculate the interest:
Interest = $900 × 0.04 × 0.5 = $18
So, Sam will earn $18 in simple interest from the loan made to Joe.