To calculate the simple interest on a loan, you can use the formula:
\[ \text{Simple Interest} = P \times r \times t \]
Where:
- \( P \) is the principal amount (the initial amount of the loan),
- \( r \) is the annual interest rate (in decimal form),
- \( t \) is the time the money is borrowed for (in years).
In this case:
- \( P = 3750 \)
- \( r = 5% = 0.05 \)
- \( t = 5 \)
Now plug the values into the formula:
\[ \text{Simple Interest} = 3750 \times 0.05 \times 5 \]
Calculating this:
\[ \text{Simple Interest} = 3750 \times 0.05 = 187.50 \]
Now multiplying by the time (5 years):
\[ \text{Simple Interest} = 187.50 \times 5 = 937.50 \]
So the simple interest on a $3,750 loan at a rate of 5% per year after 5 years is $937.50.