Sure, let's break this down step-by-step:
1. Identify the Principal Amount (P):
The principal amount is the initial amount of money that you have, which in this case is [tex]$10,000.
2. Identify the Annual Interest Rate (R):
The annual interest rate is 5%. To use it in calculations, we convert it into a decimal by dividing by 100:
\[
R = \frac{5}{100} = 0.05
\]
3. Convert Time into Years (T):
The time given is 15 months. To convert this into years, we divide by 12 (since there are 12 months in a year):
\[
T = \frac{15}{12} \approx 1.25 \text{ years}
\]
4. Calculate Simple Interest (I):
The formula for calculating simple interest is:
\[
I = P \times R \times T
\]
Substituting the given values into the formula:
\[
I = 10000 \times 0.05 \times 1.25
\]
Performing the multiplication step-by-step:
\[
10000 \times 0.05 = 500
\]
\[
500 \times 1.25 = 625
\]
Therefore, the simple interest earned over 15 months with a principal of $[/tex]10,000 at an annual interest rate of 5% is $625.
