What is the simple interest of a loan for $1,000 with 5 percent interest after 3 years?

Solution:

The formula used to calculate the simple interest is

SI = P × R × T

Principal: The principal is the amount that initially borrowed from the bank or invested. The principal is denoted by P.

Rate: Rate is the rate of interest at which the principal amount is given to someone for a certain time. The rate of interest is denoted by R.

Time: Time is the duration for which the principal amount is given to someone. Time is denoted by T.

Amount: When a person takes a loan from a bank, he/she has to return the principal borrowed plus the interest amount, and this total returned is called Amount.

It is given that

P = $1,000

R = 5% = 5/100 = 0.05

T = 3 years

Substituting it in the formula

SI = 1,000 × 0.05 × 3

SI = 150

Therefore, the simple interest of a loan is $ 150.

What is the simple interest of a loan for $1,000 with 5 percent interest after 3 years?

Summary:

The simple interest of a loan for $1,000 with 5 percent interest after 3 years is $ 150.