Using the simple interest formula $I=p r t$, calculate the interest earned on $150 after one year at a $6 \% return rate.
Answer (1)
Identify the principal amount p = $150 , the interest rate r = 6% = 0.06 , and the time t = 1 year.
Apply the simple interest formula: I = p r t .
Substitute the values into the formula: I = 150 × 0.06 × 1 .
Calculate the interest earned: I = $9.00 .
Explanation
Understanding the Problem We are asked to calculate the interest earned on $150 after one year at a 6% return rate using the simple interest formula. The simple interest formula is given by I = p r t , where I is the interest earned, p is the principal amount, r is the interest rate, and t is the time in years.
Identifying Given Values We are given the following information:
Principal amount, p = $150 Interest rate, r = 6% = 0.06 Time, t = 1 year
Applying the Formula Now, we substitute the given values into the simple interest formula:
I = p r t = 150 × 0.06 × 1
Calculating the Interest Calculating the interest earned:
I = 150 × 0.06 × 1 = 9.00
Therefore, the interest earned is $9.00 .
Examples
Simple interest calculations are useful in everyday financial planning. For instance, if you deposit $500 into a savings account that offers a 2% simple interest rate annually, you can calculate the interest earned after 3 years. Using the formula I = p r t , where p = 500 , r = 0.02 , and t = 3 , the interest earned would be I = 500 × 0.02 × 3 = $30 . This helps you understand how much your savings will grow over time.
