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 (in years)
In your case:
- \( P = 20,000 \)
- \( r = 8% = 0.08 \)
- \( t = 5 \)
Now, substituting these values into the formula:
\[ \text{Simple Interest} = 20,000 \times 0.08 \times 5 \]
Calculating that:
\[ \text{Simple Interest} = 20,000 \times 0.08 = 1,600 \] \[ \text{Simple Interest} = 1,600 \times 5 = 8,000 \]
So, the simple interest on a $20,000 loan at an interest rate of 8% after 5 years is $8,000.