A sum of $1500 is invested at a simple interest rate of 4% per annum. How much i

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Question: A sum of $1500 is invested at a simple interest rate of 4% per annum. How much interest will be earned in 5 years?

Options:

Correct Answer: $300

Solution:

Simple Interest = (1500 * 4 * 5) / 100 = $300.

A sum of $1500 is invested at a simple interest rate of 4% per annum. How much interest will be earned in 5 years?

A sum of $1500 is invested at a simple interest rate of 4% per annum. How much interest will be earned in 5 years?

Step 1: Identify the principal amount (the initial sum of money). In this case, it is $1500.
Step 2: Identify the interest rate. Here, it is 4% per annum.
Step 3: Identify the time period for which the money is invested. In this case, it is 5 years.
Step 4: Use the simple interest formula: Simple Interest = (Principal * Rate * Time) / 100.
Step 5: Plug in the values: Simple Interest = (1500 * 4 * 5) / 100.
Step 6: Calculate the multiplication: 1500 * 4 = 6000, then 6000 * 5 = 30000.
Step 7: Divide by 100 to find the interest: 30000 / 100 = 300.
Step 8: The total interest earned in 5 years is $300.

Simple Interest – The calculation of interest earned on a principal amount over a specific period at a fixed rate.