Question

in the formula $i = p \cdot r \cdot t$, what does $r$ stand for?
a. rate: the percent that interest is paid annually as a decimal
b. ratio: the size of the interest interval compared to time
c. return: how much money you end up earning
d. reserves: how much money you have in the investment

please select the best answer from the choices provided

○ a
○ b
○ c
○ d

Explanation:

The formula \( I = P \cdot r \cdot t \) is the simple - interest formula, where \( I \) is the interest, \( P \) is the principal (the initial amount of money), \( r \) is the annual interest rate (expressed as a decimal), and \( t \) is the time in years.

• Option a: Matches the definition of \( r \) as the annual interest rate (in decimal form).
• Option b: The description of "ratio of interest interval to time" is incorrect for \( r \).
• Option c: "Return" is not what \( r \) represents; the total return would involve more than just the rate.
• Option d: "Reserves" is incorrect; the principal (\( P \)) is the amount of money in the investment.

Answer:

A. Rate: the percent that interest is paid annually as a decimal