Question

Find the simple interest accrued on a $2,500 loan with an annual interest rate of 7% each year for4 years?

Answer 1

The simple interest formula is:

$i=\text{prt}$

Where

i is the interest accrued

p is the principal amount (loan amount)

r is the rate of interest, in decimal

t is the time

Now,

Given,

p = loan amount = 2500

r = 7/100 = 0.07

t = 4

Substituting into the formula, we can get the simple interest earned:

$\begin{gathered} i=\text{prt} \\ i=2500\times0.07\times4 \\ i=700 \end{gathered}$

So, for 4 years, you have to pay an interest amounting $700.

Answer: $700