simple interest earned after 3 years on $500 at an interest rate of 6%.
Solution
Organize the given information in a list.
I = ?, P = $500, r = 6%, t = 3 years
We will use the simple interest formula to find the interest.
Write the formula.
I = Prt
Substitute the given information. Remember to write the percent in decimal form.
I = (500)(0.06)(3)
Simplify.
I = 90
Check your answer. Is $90 a reasonable interest earned on $500 in 3 years?
In 3 years the money earned 18%. If we rounded to 20%, the interest would have been 500(0.20) or $100. Yes, $90 is reasonable.
Write a complete sentence that answers the question.
The simple interest is $90.
