The simple annual interest formula shows the interest charged on a loan.
To solve follow the formula - I = Prt
P is the principle, r is the annual interest in decimal form and t is the loan period.
I = ?
P principle = 3500
R interest rate = 0.05
T time 1 year
I=3,500×0.05×1
I=175
The answer is $175, so the amount of interest charged on the loan in one year is $175.
