Question

Find the simple interest for a $3000 loan for 3 years at a rate of 5% (Formula: I=Prt)​

Answer 1

$450

Explanation:

Interest= 3000(5%)(3)= $450

Common mistake: Do not use 36 as the time period. Only use the number of years, it the number of months.

Answer 2

To answer this, you use the formula
`I = Prt` where

`I` is the simple interest that builds

`P` is the principal (AKA the amount invested/borrowed)

`r` is the interest rate per year

`t` is the lenght of the loan, in years.

In your situation:

`\begin{aligned}I &= (\$3000)(5 \%/\text{year})(3 \text{ years})\\[0.5em]&= (3000)(0.05)(3)\\[0.5em]&= 450\end{aligned}`

This means there'd be $450 of simple interest due at the end of 3 years.