Miguel invests some money in a new company. What is the simple interest Miguel will earn on the money if he gave $5,000 at an annual interest rate of 4.5% for 7 years? (Use the formula 𝐼 = 𝑃𝑟𝑡, where 𝐼 is the interest, 𝑃 is the principal or initial investment, 𝑟 is the interest rate per year, and 𝑡 is the number of years.)

Question

Miguel invests some money in a new company. What is the simple interest Miguel will earn on the money if he gave $5,000 at an annual interest rate of 4.5% for 7 years? (Use the formula 𝐼 = 𝑃𝑟𝑡, where 𝐼 is the interest, 𝑃 is the principal or initial investment, 𝑟 is the interest rate per year, and 𝑡 is the number of years.)

Answer 1

The formula for simple interest is 𝐼 = 𝑃𝑟𝑡, where 𝐼 is the interest, 𝑃 is the principal or initial investment, 𝑟 is the interest rate per year, and 𝑡 is the number of years.

Substituting the given values into the formula, we have:

𝐼 = 5000 x 0.045 x 7
𝐼 = 1575

Therefore, the simple interest Miguel will earn on the money is $1,575.