A principal of $500 is invested at an annual interest rate of 4% for 3 years.

What is the simple interest earned?

The formula for calculating simple interest is:

\[
I = P \times r \times t
\]

where:
- $ I $ is the simple interest,
- $ P $ is the principal amount (initial investment),
- $ r $ is the annual interest rate (as a decimal),
- $ t $ is the time in years.

Here, the principal $ P = 500 $, the annual interest rate $ r = 4\% = 0.04 $, and the time $ t = 3 $ years.

Now, calculating the simple interest:

\[
I = 500 \times 0.04 \times 3 = 60
\]

Thus, the simple interest earned is **$60**.

Would you like any further details or have questions about this? Here are five related questions to expand on this topic:

1. How is the total amount after 3 years calculated with simple interest?
2. What would be the interest if the rate was 5% instead of 4%?
3. How does compound interest differ from simple interest?
4. What would happen if the time was doubled, but the rate stayed the same?
5. Can you explain how to calculate interest if it's compounded annually?

**Tip:** Simple interest grows linearly over time, unlike compound interest, which grows exponentially.

A principal of $500 is invested at an annual interest rate of 4% for 3 years. What is the simple interest earned?

Learn how to calculate the simple interest earned on an investment of $500 at an annual interest rate of 4% for 3 years. This problem demonstrates the simple interest formula (I = P × r × t) and is ideal for students in Grades 6-8.

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