Question

Calculate simple interest on $20,000 loan at an interest rate of 8% after 5 yrs

Answer 1

To calculate simple interest, you can use the formula:

\[
\text{Simple Interest} = P \times r \times t
\]

where:
- \( P \) is the principal amount (the initial loan amount),
- \( r \) is the annual interest rate (in decimal),
- \( t \) is the time in years.

In your case:
- \( P = 20,000 \)
- \( r = 8\% = 0.08 \)
- \( t = 5 \)

Plugging in the values:

\[
\text{Simple Interest} = 20,000 \times 0.08 \times 5
\]

Calculating this:

\[
\text{Simple Interest} = 20,000 \times 0.08 = 1,600
\]
\[
\text{Simple Interest} = 1,600 \times 5 = 8,000
\]

So, the simple interest on a $20,000 loan at an interest rate of 8% after 5 years is **$8,000**.