A person invests $1000 at a simple interest rate of 5% per annum. How much inter

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Question: A person invests $1000 at a simple interest rate of 5% per annum. How much interest will he earn in 3 years?

Options:

Correct Answer: $100

Solution:

Simple Interest = Principal * Rate * Time = $1000 * 5% * 3 = $1000 * 0.05 * 3 = $150.

A person invests $1000 at a simple interest rate of 5% per annum. How much interest will he earn in 3 years?

A person invests $1000 at a simple interest rate of 5% per annum. How much interest will he earn in 3 years?

Step 1: Identify the principal amount (the initial investment). In this case, it is $1000.
Step 2: Identify the interest rate. Here, the interest rate is 5% per annum.
Step 3: Identify the time period for which the money is invested. In this case, it is 3 years.
Step 4: Convert the interest rate from a percentage to a decimal. 5% as a decimal is 0.05.
Step 5: Use the simple interest formula: Simple Interest = Principal * Rate * Time.
Step 6: Substitute the values into the formula: Simple Interest = $1000 * 0.05 * 3.
Step 7: Calculate the interest: $1000 * 0.05 = $50, then $50 * 3 = $150.
Step 8: The total interest earned after 3 years is $150.

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