How much simple interest is earned after 5 years if a bank lends 10,000 to a business for 8% a year
To calculate the simple interest earned after 5 years on a loan of $10,000 with an 8% interest rate per year, we can use the formula:
Simple Interest = Principal × Rate × Time
Where:
Principal = $10,000
Rate = 8% = 0.08 (since in decimal form)
Time = 5 years
Substituting the given values into the formula, we get:
Simple Interest = $10,000 × 0.08 × 5
= $10,000 × 0.4
= $4,000
Therefore, the simple interest earned after 5 years would be $4,000.