Question

which of the following is a financial institution that handles money, including keeping it safe for saving or commercial purposes?
a. payday lender
b. bank
c. check cashing service
d. pawn shop

using the simple interest formula, calculate the interest earned on $150 after one year at a 6% return rate.
a. $90.00
b. $0.00
c. $9.00
d. $4.00

Explanation:

First Sub - Question (Multiple - Choice about Financial Institution)

To determine the financial institution that handles money for saving or commercial purposes:

• Option a: A payday lender mainly offers short - term loans with high interest, not focused on saving or general commercial money handling.
• Option b: A bank is a financial institution that accepts deposits (for saving) and provides services for commercial purposes like business loans, handling business transactions etc.
• Option c: A check - cashing service is mainly for cashing checks, not for saving or broad commercial money management.
• Option d: A pawn shop offers loans in exchange for personal items as collateral, not for saving or commercial money handling.

Step 1: Recall the simple interest formula

The simple interest formula is $I = P\times r\times t$, where $I$ is the interest, $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years.
Here, $P=\$150$, $r = 6\%=0.06$ (converted to decimal), and $t = 1$ year.

Step 2: Substitute the values into the formula

Substitute $P = 150$, $r=0.06$, and $t = 1$ into the formula $I=P\times r\times t$.
We get $I=150\times0.06\times1$.
First, calculate $150\times0.06 = 9$. Then multiply by $1$ (since $t = 1$), so $I = 9$.

Answer:

b. Bank

Second Sub - Question (Simple Interest Calculation)