To solve this question, let us understand the formula for calculating simple interest.
Simple interest can be computed using the formula:
[tex]\[ \text{Simple Interest} = P \times r \times t \][/tex]
where:
- [tex]\( P \)[/tex] represents the principal amount (the initial amount of money)
- [tex]\( r \)[/tex] is the nominal annual interest rate (as a decimal)
- [tex]\( t \)[/tex] is the length of the investment (in years)
According to the problem, to calculate simple interest, one must multiply the principal by the nominal interest rate and the length of investment.
From the formula mentioned:
- We see the principal amount ([tex]\( P \)[/tex]) indeed needs to be multiplied by the interest rate ([tex]\( r \)[/tex]).
- It also needs to be multiplied by the length of time ([tex]\( t \)[/tex]) the money is invested or borrowed for.
Therefore, the statement given in the question precisely matches the formula used to calculate simple interest. Hence, this statement is:
True
