How much simple interest is earned after 5 years if a bank lends $10,000 to a business for 8 percent a year

Answer 1

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

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

Where:

• \( P \) is the principal amount (the initial amount of money),
• \( r \) is the rate of interest per year (as a decimal),
• \( t \) is the time the money is lent for, in years.

In this case:

• \( P = 10,000 \)
• \( r = 0.08 \) (8 percent as a decimal)
• \( t = 5 \) years

Now, plug the values into the formula:

\[ \text{Simple Interest} = 10,000 \times 0.08 \times 5 \]

Calculating that gives:

\[ \text{Simple Interest} = 10,000 \times 0.08 = 800 \] \[ \text{Simple Interest} = 800 \times 5 = 4,000 \]

So, the simple interest earned after 5 years is $4,000.