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A person invests $2000 at a rate of 6% per annum. How much interest will he earn

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Question: A person invests $2000 at a rate of 6% per annum. How much interest will he earn in 4 years under simple interest? (2023)

Options:

  1. $480
  2. $4800
  3. $240
  4. $2400

Correct Answer: $480

Exam Year: 2023

Solution: 

Using SI = P * r * t / 100, we have SI = 2000 * 6 * 4 / 100 = $480.

A person invests $2000 at a rate of 6% per annum. How much interest will he earn

Practice Questions

Q1
A person invests $2000 at a rate of 6% per annum. How much interest will he earn in 4 years under simple interest? (2023)
  1. $480
  2. $4800
  3. $240
  4. $2400

Questions & Step-by-Step Solutions

A person invests $2000 at a rate of 6% per annum. How much interest will he earn in 4 years under simple interest? (2023)
  • Step 1: Identify the principal amount (P). In this case, P = $2000.
  • Step 2: Identify the rate of interest (r). Here, r = 6%.
  • Step 3: Identify the time period (t) in years. In this case, t = 4 years.
  • Step 4: Use the simple interest formula: SI = P * r * t / 100.
  • Step 5: Substitute the values into the formula: SI = 2000 * 6 * 4 / 100.
  • Step 6: Calculate the multiplication: 2000 * 6 = 12000, then 12000 * 4 = 48000.
  • Step 7: Divide by 100: 48000 / 100 = 480.
  • Step 8: The interest earned in 4 years is $480.
  • Simple Interest Calculation – Understanding how to calculate simple interest using the formula SI = P * r * t / 100, where P is the principal amount, r is the rate of interest, and t is the time in years.
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