Calculate the simple interest on a $20,000 loan at an interest rate of 8 percent after 5 years.(1 point)

Question

Responses

$80,000
$80,000

$8,000
$8,000

$800,000
$800,000

$1,600

Answer 1

To calculate the simple interest, you can use the formula:

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

where:

• \( P \) is the principal amount ($20,000),
• \( r \) is the interest rate (8% or 0.08), and
• \( t \) is the time (5 years).

Now, plug in the values:

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

Calculating:

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

Then,

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

So the simple interest after 5 years is $8,000.

The correct response is:

$8,000.