Sure, let's calculate the simple interest step by step.
The formula to calculate simple interest is:
[tex]\[ I = \frac{P \times r \times t}{100} \][/tex]
where:
- [tex]\( I \)[/tex] is the simple interest,
- [tex]\( P \)[/tex] is the principal amount,
- [tex]\( r \)[/tex] is the annual interest rate in percentage,
- [tex]\( t \)[/tex] is the time period in years.
Given:
- [tex]\( P = 550 \)[/tex] dollars,
- [tex]\( t = 5 \)[/tex] years,
- [tex]\( r = 3 \)[/tex]%,
we can plug these values into the formula:
[tex]\[ I = \frac{550 \times 3 \times 5}{100} \][/tex]
Calculating the above step-by-step:
1. Multiply the principal amount ([tex]\( P \)[/tex]) by the interest rate ([tex]\( r \)[/tex]):
[tex]\[ 550 \times 3 = 1650 \][/tex]
2. Multiply the result by the number of years ([tex]\( t \)[/tex]):
[tex]\[ 1650 \times 5 = 8250 \][/tex]
3. Divide by 100 to get the simple interest:
[tex]\[ \frac{8250}{100} = 82.5 \][/tex]
So, the simple interest paid on the principal sum of \[tex]$550, deposited for 5 years at an interest rate of 3%, is \$[/tex]82.50.
