A bank offers 5% interest per annum. If you invest $1,000, how much interest wil

A bank offers 5% interest per annum. If you invest $1,000, how much interest will you earn in 3 years?

A bank offers 5% interest per annum. If you invest $1,000, how much interest will you earn in 3 years?

Step 1: Identify the principal amount (the initial amount of money you invest). In this case, it is $1,000.
Step 2: Identify the interest rate. The bank offers 5% interest per annum.
Step 3: Identify the time period for which the money is invested. Here, it is 3 years.
Step 4: Convert the interest rate from a percentage to a decimal. 5% as a decimal is 5/100, which equals 0.05.
Step 5: Use the simple interest formula: Simple Interest = Principal * Rate * Time.
Step 6: Plug in the values: Simple Interest = $1,000 * 0.05 * 3.
Step 7: Calculate the interest: $1,000 * 0.05 = $50, then $50 * 3 = $150.
Step 8: The total interest earned after 3 years is $150.

Simple Interest Calculation – Understanding how to calculate simple interest using the formula: Interest = Principal * Rate * Time.