Simple Interest Calculation: How Much Will Sam Earn?

Question:

Joe borrowed $900 from Sam for six months. How much will Sam earn if he charges Joe a simple interest rate of 4 percent?

a). $18

b). $216

c). $918

Final answer:

Using the formula for simple interest, we find that Sam will earn $18 after lending Joe $900 at a 4% interest rate for a period of six months.

Explanation:

To calculate how much Sam will earn, we need to apply the formula for simple interest which is: Principal amount x Interest rate x Time. In this case, the principal amount is $900, the interest rate is 4% (0.04 in decimal form), and the time is 0.5 years (since 6 months is half a year).

Therefore, the simple interest that Sam will earn is: $900 x 0.04 x 0.5 = $18. Hence, the correct answer is a). $18.