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.