Use the simple interest formula I=prt, where I is the interest, p the principal, r the annual interest rate, and t the time in years.
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If we have a savings account, the bank pays us interest for the use of our money. To calculate the interest I, we use the simple interest formula.
I= p r t, where...
I& =Interest
p& = Principal
r& = Annual interest rate
t& = Time (in years)We are given that the principal is $640, the interest rate is 3 %, and the time is 2 years. We want to find the simple interest earned to the nearest cent. Keep in mind that 3 % is written in decimal form as 0.03.
p= 640, r= 0.03, t= 2
To calculate the interest, let's substitute these values into the simple interest formula and evaluate the right-hand side.
