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29 October, 15:37

What is the simple interest of a loan for $1,000 with 5 percent interest after 3 years?

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  1. 29 October, 16:06
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    Simple interest produces interest only over the initial amount.

    So every year the interest will be $1000 * 5 / 100 = $50.

    That is, after 3 years 3 * $50 = $ 150.

    Simple interest does not take into account the reduction of the principal but calculates the interest over the same initial amount, in this case $1000.

    So, the answer is $150, which is the result of $50 times 3.
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