Question

Calculate simple interest on $4000 loan with interest rate of 8% for 2 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 form),
- \( t \) is the time the money is borrowed (in years).

For your loan:
- \( P = 4000 \) (the loan amount),
- \( r = 0.08 \) (8% expressed as a decimal),
- \( t = 2 \) (the number of years).

Now plug in the values:

\[
\text{Simple Interest} = 4000 \times 0.08 \times 2
\]

Calculating this gives:

\[
\text{Simple Interest} = 4000 \times 0.08 = 320
\]

\[
\text{Simple Interest} = 320 \times 2 = 640
\]

So, the simple interest on a $4000 loan at an 8% interest rate for 2 years is **$640**.