Question

Investment problems

p=$300
r=7%
t=2


what is i?


​A)$4.20

B)$42.00

C)$420.00

Answer 1

B

Explanation:

This is a simple interest problem. The formula for simple interest is:

`i=Prt`

Where

i is the interest amount

P is the principal amount

r is the rate of interest

t is the time in years

Given P, r, and t, we need to find convert r (as a percentage) to a decimal. We simply divide by 100. Shown below:

r = 7% = 7/100 = 0.07

Now, we substitute into formula and find i (interest):

`i=Prt\\i=(300)(0.07)(2)\\i=42`

Correct answer is B, $42