Question

1. calculate the simple interest earned on an account starting with the principal stated below and paying the specified annual rate of interest for the time stated. round to the nearest dollar. principal = $16,000, rate = 3%, time = 5 years

a $2,548
b $2,672
c $6,400
d $2,400

Explanation:

Step1: Recall simple interest formula

The formula for simple interest is $I = P \times r \times t$, where $I$ is the simple interest, $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years.

Step2: Convert rate to decimal

Given the rate is $3\%$, we convert it to a decimal by dividing by 100: $r=\frac{3}{100} = 0.03$.

Step3: Substitute values into formula

We know $P = \$16,000$, $r = 0.03$, and $t = 5$ years. Substituting these into the formula: $I=16000\times0.03\times5$.

Step4: Calculate the interest

First, calculate $16000\times0.03 = 480$. Then, multiply by 5: $480\times5 = 2400$.

Answer:

d. $2,400$