alleryStart learning →How much simple interest is earned on $800 invested for 4 years at an interest rate of 5%?
A$40
B$200
C$120
D$160
Answer & Solution
Correct answer: D. $160
1. Use the simple interest formula I = Prt.
2. Substitute the values with the rate as a decimal: I = 800 x 0.05 x 4.
3. Multiply: I = 160, so the interest earned is $160.
4. $40 is one year's interest only, the slip of leaving out the 4 years.
_Source: OpenStax Prealgebra (CC BY 4.0), Ch 6 "Percents", section 6.4 Solve Simple Interest Applications_
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