Question: The simple interest on a principal of $300 at an interest rate of 5% is $45. For how many years is the simple interest calculated?
A ) 3 B ) 6 C ) 5 D ) 4
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 5% = 5 ÷ 100 = 0.05
[Substitute 45 for I, 300 for p and 0.05 for r.] 4 45 = (300 × t × 0.05)
