A sum of $800 is invested at a rate of 5% per annum. What will be the total amou

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Question: A sum of $800 is invested at a rate of 5% per annum. What will be the total amount after 3 years using simple interest?

Options:

Correct Answer: $880

Solution:

Simple Interest = Principal * Rate * Time = 800 * 0.05 * 3 = $120. Total Amount = Principal + Interest = 800 + 120 = $920.

A sum of $800 is invested at a rate of 5% per annum. What will be the total amount after 3 years using simple interest?

A sum of $800 is invested at a rate of 5% per annum. What will be the total amount after 3 years using simple interest?

Step 1: Identify the principal amount (the initial investment). In this case, it is $800.
Step 2: Identify the interest rate. Here, it is 5% per annum, which can be written as 0.05 in decimal form.
Step 3: Identify the time period for the investment. In this case, it is 3 years.
Step 4: Calculate the simple interest using the formula: Simple Interest = Principal * Rate * Time.
Step 5: Substitute the values into the formula: Simple Interest = 800 * 0.05 * 3.
Step 6: Perform the multiplication: 800 * 0.05 = 40, then 40 * 3 = 120. So, the simple interest is $120.
Step 7: Calculate the total amount after 3 years by adding the simple interest to the principal: Total Amount = Principal + Interest.
Step 8: Substitute the values: Total Amount = 800 + 120.
Step 9: Perform the addition: 800 + 120 = 920. Therefore, the total amount after 3 years is $920.

Simple Interest Calculation – Understanding how to calculate simple interest using the formula: Interest = Principal * Rate * Time.
Total Amount Calculation – Knowing how to find the total amount by adding the principal to the calculated interest.