Using the simple interest formula [tex]$I=p r t$[/tex], calculate the interest earned on $150 after one year at a [tex]$6\%$[/tex] return rate.
A. $90.00
B. $0.09
C. $9.00
D. $4.00
Answer (2)
Identify the principal amount ( p ), interest rate ( r ), and time ( t ).
Apply the simple interest formula: I = p × r × t .
Substitute the given values: I = 150 × 0.06 × 1 .
Calculate the interest earned: I = $9.00 .
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. The formula for simple interest is: I = p r t where:
I is the interest earned,
p is the principal amount,
r is the interest rate (as a decimal),
t is the time period (in years).
Substituting the Values We are given:
Principal amount, p = $150
Interest rate, r = 6% = 0.06
Time, t = 1 year We substitute these values into the simple interest formula:
Calculating the Interest I = 150 × 0.06 × 1 I = 9 Therefore, the interest earned is $9.00 .
Examples
Simple interest calculations are commonly used in everyday financial planning. For example, when you deposit money into a savings account, the bank often uses simple interest to calculate the interest earned on your deposit each year. Understanding simple interest helps you estimate the returns on investments or the cost of borrowing money, making it easier to make informed financial decisions. If you deposit $1000 into a savings account with a 5% annual simple interest rate, after 3 years, you would earn $1000 × 0.05 × 3 = $150 in interest.
The interest earned on $150 after one year at a 6% return rate is 9.00 , c a l c u l a t e d u s in g t h e f or m u l a I = p \times r \times t$.
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