Question

What is the total amount of interest from a \(\$ 5,000\) loan after three years with a simple interest rate of \(6 \% ?\)

Short answer

The total amount of interest from the $5000 loan after three years with a simple interest rate of \(6\%\) is \(\$ 900\).

Step-by-step solution

Understand the simple interest formula

The simple interest formula is: \(I = P \times r \times t\), where \(I\) is the interest, \(P\) is the principal (loan amount), \(r\) is the simple interest rate, and \(t\) is the number of years.

Extract given information from the exercise

We are given the following details: Principal (\(P\)) = \(\$ 5,000\) Simple Interest Rate (\(r\)) = \(6\%\) Number of Years (\(t\)) = \(3\) years

Convert the percentage to a decimal

The simple interest rate is given as a percentage, so we need to convert it into a decimal form. To do that, divide the percentage by 100: \(r = \frac{6}{100} = 0.06\)

Use the simple interest formula to calculate the interest

Now that we have all the necessary values, we can plug them into our simple interest formula: \(I = P \times r \times t = 5000 \times 0.06 \times 3\)

Calculate the result

Multiply the numbers together: \(I = 5000 \times 0.06 \times 3 = 300\) \(I = 900\) The total amount of interest is \(\$ 900\).