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

$900

Step-by-step solution

Step 1. Definition

Simple interest is an easy method of calculating interest. Simple interest is calculated by multiplying the interest rate by the principal by the number of days.

Step 2. Explanation

$$\begin{gathered} Interest=\frac{5000\times 6\times 3}{100} \\ Interest=\$900 \end{gathered}$$

so the interest becomes $900 after 3 years.