The simple interest formula<span> allows us to calculate I, which is the </span>interest<span> earned or charged on a loan. According to this </span>formula<span>, the amount of </span>interest<span> is given by I = Prt, where P is the principal, r is the annual </span>interest<span> rate in decimal form, and t is the loan period expressed in years.
I = Prt I = 5500 (8) (0.025) = 1100 <----second option</span>
