A sum of $1500 is invested at a simple interest rate of 4% per annum. What will

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Question: A sum of $1500 is invested at a simple interest rate of 4% per annum. What will be the total amount after 5 years?

Options:

Correct Answer: $1600

Solution:

Simple Interest = 1500 * 0.04 * 5 = $300. Total Amount = 1500 + 300 = $1800.

A sum of $1500 is invested at a simple interest rate of 4% per annum. What will be the total amount after 5 years?

A sum of $1500 is invested at a simple interest rate of 4% per annum. What will be the total amount after 5 years?

Step 1: Identify the principal amount (the initial investment), which is $1500.
Step 2: Identify the interest rate, which is 4% per annum. Convert this percentage to a decimal by dividing by 100, so 4% becomes 0.04.
Step 3: Identify the time period for the investment, which is 5 years.
Step 4: Use the simple interest formula: Simple Interest = Principal * Rate * Time.
Step 5: Plug in the values: Simple Interest = 1500 * 0.04 * 5.
Step 6: Calculate the simple interest: 1500 * 0.04 = 60, then 60 * 5 = 300. So, the simple interest is $300.
Step 7: Calculate the total amount after 5 years by adding the simple interest to the principal: Total Amount = Principal + Simple Interest.
Step 8: Plug in the values: Total Amount = 1500 + 300.
Step 9: Calculate the total amount: 1500 + 300 = 1800.

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