Simple Interest Practice

Question Icon

Question 1

Calculate the simple interest of a $3000 loan with the interest of 3% per year. The duration of the loan is 5 years.


Answer Icon

Select and check your answer...

A. $450
B. $600
C. $750
D. $1000

Step by Step Solution

  • Lesson Icon

    Step 1

    We can start with the simple interest formula:

    simple interest formula


    • P is the principal ($3000)
    • r is the interest rate per year (3%)
    • t is the loan duration in years (5 years).
  • Lesson Icon

    Step 2

    With P=3000, r=3% and t=5, we can substitute these values into the formula as shown (Take note that, 3% must be changed to 3/100 before we can calculate):

    using the simple interest formula
  • Lesson Icon

    Step 3

    The calculated interest is $450. Hence, the answer is A.