Question

Katie borrowed $2,500 at 10% simple interest for 5 years. What was the total interest?

A. $12.50

B. 125.00

C. 1,250.00

D. 12,500.00

Answer 1

2500 *.1 * 5 = $1250

answer is C. 1,250.00

Answer 2

The formula for simple interest is - I = P • r • t

Where:
1.) P is the principle amount ( 2500.00 ).
2.) r is the interest rate
10% = 10/100 = ( 0.1 )
3.) t is the time ( 5 )

So your equation should look like.

I = 2500.00 • 0.1 • 5
2500.00 • 0.5
1250.00
I = 1250.00