A bank offers a simple interest rate of 5% per annum. If you invest $2000 for 3

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Question: A bank offers a simple interest rate of 5% per annum. If you invest $2000 for 3 years, what will be the total interest earned?

Options:

Correct Answer: $400

Solution:

Simple Interest = Principal × Rate × Time = 2000 × 0.05 × 3 = $300.

A bank offers a simple interest rate of 5% per annum. If you invest $2000 for 3 years, what will be the total interest earned?

A bank offers a simple interest rate of 5% per annum. If you invest $2000 for 3 years, what will be the total interest earned?

Step 1: Identify the principal amount (the initial investment). In this case, it is $2000.
Step 2: Identify the interest rate. The bank offers a simple interest rate of 5% per annum, which can be written as 0.05 in decimal form.
Step 3: Identify the time period for the investment. Here, the investment is for 3 years.
Step 4: Use the simple interest formula: Simple Interest = Principal × Rate × Time.
Step 5: Plug in the values: Simple Interest = 2000 × 0.05 × 3.
Step 6: Calculate the interest: 2000 × 0.05 = 100, then 100 × 3 = 300.
Step 7: The total interest earned after 3 years is $300.

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