The simple interest formula is defined as
[tex]\begin{gathered} I=Prt \\ \text{where} \\ P\text{ is the principal amount} \\ r\text{ is the rate converted to decimal} \\ t\text{ is time in years} \end{gathered}[/tex]Given
P = $4,200
r = 7% → 0.07 (converted to decimal)
t = 1 year
Substitute the following values and we get
[tex]\begin{gathered} I=(4200)(0.07)(1) \\ I=294 \end{gathered}[/tex]Therefore, the simple interest earned is $294.
