Question

hanna puts $4,383 in a savings account with an annual interest rate of 5.2 percent for 3 years. into which variable should she substitute 4,383 in the simple interest formula \\(i = prt\\)?

• \\(i\\)
• \\(p\\)
• \\(r\\)
• \\(t\\)

Explanation:

Identify the components of the simple interest formula

Using the Simple Interest Formula and Financial Terminology knowledge points

$$ I = prt $$

where:

• \(I\) is the interest earned.
• \(p\) is the principal amount (the initial money deposited or borrowed).
• \(r\) is the annual interest rate (as a decimal).
• \(t\) is the time in years.

Match the given value to the correct variable

Using the Financial Terminology knowledge point

• Hanna deposits an initial amount of \(\$4,383\).
• This starting balance represents the principal.
• Therefore, \(4,383\) must be substituted for \(p\).

Answer:

• (A) \(I\)
• (B) \(p\) (Correct answer)
• (C) \(r\)
• (D) \(t\)