Solve the Given Problem, Using the Formula $I = P R T :$

question 28

Multiple Choice

Solve the given problem, using the formula $I = P R T :$ Find the simple interest paid on a Ioan of $\$ 1,200$ at $8 \frac { 1 } { 4 } \%$ interest for 5 years.

• A)$49.50
• B)$4.95
• C)$495
• D)$4,950

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Definitions:

Perpetual Payments

Payments that continue indefinitely, often seen in perpetuities where an initial investment pays a constant amount to the investor forever.

Discount Rate

The interest rate that the Federal Reserve charges banks for short-term loans, which influences monetary policy and the cost of borrowing.

Investment

Allocation of resources, usually financial, in expectation of generating an income or profit over time through appreciation, dividends, or interests.

Pay

Compensation received by an employee from an employer in exchange for performing a job.