What is the simple interest value missing in the table?
| Principal | $2,500 |
|---|---|
| Interest rate | 3.5% |
| Time | 5 years |
| Interest | ? |
A. $43.75
B. $437.50
C. $4,370.50
D. $43,750.00
Answer (2)
Identify the principal, interest rate, and time.
Convert the interest rate to a decimal.
Use the simple interest formula: I n t eres t = P r in c i p a l × R a t e × T im e .
Calculate the simple interest: I n t eres t = 2500 × 0.035 × 5 = $437.50 .
Explanation
Understanding the Problem We are given the principal amount, the interest rate, and the time period. We need to calculate the simple interest earned on the principal amount.
Stating the Formula The formula for calculating simple interest is: I n t eres t = P r in c i p a l × R a t e × T im e Where:
Principal is the initial amount of money.
Rate is the interest rate (as a decimal).
Time is the number of years.
Identifying the Values We are given:
Principal = $2,500
Interest rate = 3.5% = 0.035 (as a decimal)
Time = 5 years
Calculating the Interest Now, we plug these values into the formula: I n t eres t = 2500 × 0.035 × 5 I n t eres t = 2500 × 0.175 I n t eres t = 437.5 So, the simple interest is $437.50.
Final Answer The simple interest earned is $437.50.
Examples
Simple interest is a fundamental concept in finance and is used in many real-life scenarios. For example, when you deposit money in a savings account, the bank pays you interest on your deposit. Similarly, when you take out a loan, you pay interest to the lender. Understanding how simple interest works can help you make informed decisions about saving, borrowing, and investing money. For instance, if you deposit $2,500 in a savings account with a 3.5% simple interest rate for 5 years, you will earn $437.50 in interest. This knowledge can help you plan your savings goals and make the most of your money.
The simple interest earned on a principal of $2,500 at an interest rate of 3.5% over 5 years is $437.50. This is calculated using the formula for simple interest: Interest = Principal × Rate × Time. The correct answer is B. $437.50 .
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