A person invests $5000 in a stock that gives a simple interest of 6% per annum.

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Question: A person invests $5000 in a stock that gives a simple interest of 6% per annum. What will be the interest earned in 3 years?

Options:

Correct Answer: $900

Solution:

Simple Interest = Principal * Rate * Time / 100 = 5000 * 6 * 3 / 100 = $900

A person invests $5000 in a stock that gives a simple interest of 6% per annum. What will be the interest earned in 3 years?

A person invests $5000 in a stock that gives a simple interest of 6% per annum. What will be the interest earned in 3 years?

Step 1: Identify the principal amount (the initial investment). In this case, it is $5000.
Step 2: Identify the interest rate. Here, it is 6% per annum.
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 / 100.
Step 5: Plug in the values: Simple Interest = 5000 * 6 * 3 / 100.
Step 6: Calculate the interest: 5000 * 6 = 30000, then 30000 * 3 = 90000, and finally 90000 / 100 = 900.
Step 7: The interest earned in 3 years is $900.

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