If a person invests $2000 at an interest rate of 5% per annum, how much interest

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Question: If a person invests $2000 at an interest rate of 5% per annum, how much interest will he earn in 3 years?

Options:

Correct Answer: 300

Solution:

Simple interest = Principal * Rate * Time = 2000 * 0.05 * 3 = $300.

If a person invests $2000 at an interest rate of 5% per annum, how much interest will he earn in 3 years?

If a person invests $2000 at an interest rate of 5% per annum, how much interest will he earn in 3 years?

Step 1: Identify the principal amount, which is the initial investment. In this case, it is $2000.
Step 2: Identify the interest rate. Here, the interest rate is 5% per annum, which can be written as 0.05 in decimal form.
Step 3: Identify the time period for which the money is invested. In this case, it is 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 Calculation – Understanding how to calculate simple interest using the formula: Interest = Principal * Rate * Time.