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Question: Find the simple interest on a principal of $140 for a period of 4 years at an interest rate of 3%.


A ) $15.80
B ) $16.80
C ) $17.80
D ) $18.80

Steps to derive

1 Simple interest is the interest paid only on the original deposit or the principal.

2 The formula used to calculate the simple interest is I = ptr, where, I is the simple interest, p is the principal, t is the time in years and r is the interest rate per year.

3 The rate of interest is 3% = 3 ÷ 100 = 0.03

 [Substitute 140 for p, 4 for t and 0.03 for r.]
4 I = (140 × 4 × 0.03)

 [Multiply.]
5 = 16.80

6 The simple interest earned on the principal of $140 for a period of 4 years at an interest rate of 3% is $16.80.



Hence the right answer is Option B

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