Understanding Interest Practice

Question

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Question
Determine the accrued interest amount of a $5,000 student loan with a simple interest rate of 5.4% over a period of 8 years. Round the answer to two decimal places as needed.(1 point)
The accrued interest amount is $
.
Remaining Attempts : 3

Answer 1

To calculate the accrued interest on a loan using simple interest, you can use the formula:

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

Where:

• \( P \) is the principal amount (initial loan amount),
• \( r \) is the annual interest rate (in decimal form),
• \( t \) is the time in years.

In this case:

• \( P = 5000 \)
• \( r = 5.4% = 0.054 \)
• \( t = 8 \)

Now plug the values into the formula:

\[ \text{Interest} = 5000 \times 0.054 \times 8 \]

Calculating this step-by-step:

1. Multiply the interest rate by the time: \[ 0.054 \times 8 = 0.432 \]

2. Now multiply this by the principal: \[ 5000 \times 0.432 = 2160 \]

Therefore, the accrued interest amount is:

\[ \text{Accrued Interest} = 2160 \]

So the accrued interest amount is $2160.00.