Q14. - Algebra 2

Question

Use the following information.

Simple interest is calculated using the formula $I=prt$, where $p$ represents the principal in dollars, $r$ represents the annual interest rate, and $t$ represents the time in years. Find the simple interest $I$ given each of the following values.

 $p=\$5000,r=3.75\%,t=10years$

Step-by-Step Solution

Answer

Simple interest is  $I=\$1875$

Step 1 - Meaning of given formula I = p r t

$prt$ implies product of principle value, annual interest rate and time 

So, interest rate can be evaluated by multiplying these three values

Step 2 - Substitute given values

Substitute $\$5000$  for $p$, $3.75\%$ for r and 10 for t into given expression

 $I=5000\times 3.75\%\times 10$

Step 3 - Simplify 5000 × 3 . 75 % × 10

Substitute $\frac{3.75}{100}$ for  $3.75\%$

 $\begin{array}{c}I=5000\times \frac{3.75}{100}\times 10\\ =\frac{187500}{100}\\ =1875\end{array}$

Thus, simple interest is  $I=\$1875$