A person invests $1000 at an interest rate of 5% per annum. How much interest wi

A person invests $1000 at an interest rate of 5% per annum. How much interest will he earn in 3 years?

A person invests $1000 at an interest rate of 5% per annum. How much interest will he earn in 3 years?

Step 1: Identify the principal amount, which is the initial investment. In this case, it is $1000.
Step 2: Identify the interest rate. Here, the interest rate is 5% per annum, which can be written as 0.05 in decimal form.
Step 3: Identify the time period for which the money is invested. In this case, it is 3 years.
Step 4: Use the formula for calculating interest: Interest = Principal × Rate × Time.
Step 5: Substitute the values into the formula: Interest = 1000 × 0.05 × 3.
Step 6: Calculate the interest: 1000 × 0.05 = 50, then 50 × 3 = 150.
Step 7: The total interest earned after 3 years is $150.

Simple Interest Calculation – The formula for calculating simple interest is Interest = Principal × Rate × Time.