If the principal amount is $1000 and the rate of interest is 5% per annum, what

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Question: If the principal amount is $1000 and the rate of interest is 5% per annum, what will be the simple interest for 3 years?

Options:

Correct Answer: $100

Solution:

Simple Interest = Principal × Rate × Time / 100 = 1000 × 5 × 3 / 100 = $150.

If the principal amount is $1000 and the rate of interest is 5% per annum, what will be the simple interest for 3 years?

If the principal amount is $1000 and the rate of interest is 5% per annum, what will be the simple interest for 3 years?

Step 1: Identify the principal amount, which is $1000.
Step 2: Identify the rate of interest, which is 5%.
Step 3: Identify the time period, which is 3 years.
Step 4: Use the formula for simple interest: Simple Interest = Principal × Rate × Time / 100.
Step 5: Substitute the values into the formula: Simple Interest = 1000 × 5 × 3 / 100.
Step 6: Calculate the multiplication: 1000 × 5 = 5000, then 5000 × 3 = 15000.
Step 7: Divide by 100: 15000 / 100 = 150.
Step 8: The simple interest for 3 years is $150.

Simple Interest Calculation – Understanding how to calculate simple interest using the formula: Simple Interest = Principal × Rate × Time / 100.