Calculating Simple Interest
The question asks to determine the amount of simple interest earned for the use of a loan. To calculate the simple interest, you can use the formula:
\[ \text{Simple Interest (SI)} = \text{Principal (P)} \times \text{rate (r)} \times \text{time (t)} \]
In the problem:
- Principal (P) = $5,400
- Rate (r) = 10% per year or 0.10 when expressed as a decimal
- Time (t) = 18 years
Plugging the values into the formula, we get:
\[ \text{SI} = 5400 \times 0.10 \times 18 \]
\[ \text{SI} = 5400 \times 1.8 \]
\[ \text{SI} = 9720 \]
Therefore, the amount of simple interest earned over the 18 year period would be $9,720.
