Question

Calculate the simple interest earned. Round to the nearest cent.P = $4200, r = 7%, t = 1 year

Answer 1

The simple interest formula is defined as

`\begin{gathered} I=Prt \\ \text{where} \\ P\text{ is the principal amount} \\ r\text{ is the rate converted to decimal} \\ t\text{ is time in years} \end{gathered}`

Given

P = $4,200

r = 7% → 0.07 (converted to decimal)

t = 1 year

Substitute the following values and we get

`\begin{gathered} I=(4200)(0.07)(1) \\ I=294 \end{gathered}`

Therefore, the simple interest earned is $294.