Calculate the simple interest on a $4,000 loan at an interest rate of 8 percent after 2 years.
Responses
$6,400
$64,000
$640
$320
To calculate the simple interest, we can use the formula:
Simple Interest = Principal × Rate × Time
Given:
Principal (P) = $4,000
Rate (R) = 8% (which can be written as 0.08 in decimal form)
Time (T) = 2 years
Plugging in the values:
Simple Interest = $4,000 × 0.08 × 2
= $640
Therefore, the simple interest on a $4,000 loan at an interest rate of 8 percent after 2 years is $640. The correct answer choice is $640.