Simple interest earned on the principal amount $10,000 for 5 years at 4% interest per year will be $12,000.
As given in the question,
Simple Interest:
The simple interest is an amount that is paid for loan or borrowed money over a certain period at a fixed percentage of borrowed money.
Principal amount:
Principal amount is the money that is taken as loan or borrowed.
Formula of Simple Interest:
Simple interest = Principal amount × Rate × Time
Since,
Principal amount = $10,000
Rate = 4% per year
Time = 5 years
Then,
Simple interest = 10,000 × 4 × 5
Simple interest = $ 12000
Total value after 5 years = $ 12000
Principal amount = $ 10000
Interest Earned = (Total value) - (Principal amount)
Interest Earned = $ 12000 - $ 10000
Interest Earned = $ 2000
Therefore, simple interest earned on the principal amount $10,000 for 5 years at 4% interest per year will be $12,000.
The complete question is:
Fabian is taking out a loan in the amount of $10,000. His choices for the loan are a 5-year loan at 4% rate of interest .What is the amount of simple interest and interest earned Fabian would have to pay?
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