A bank offers an interest rate of 6% per annum. How much interest will be earned

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Question: A bank offers an interest rate of 6% per annum. How much interest will be earned on a deposit of $1000 after 3 years?

Options:

Correct Answer: $200

Solution:

Interest = Principal * Rate * Time = 1000 * 0.06 * 3 = $180

A bank offers an interest rate of 6% per annum. How much interest will be earned on a deposit of $1000 after 3 years?

A bank offers an interest rate of 6% per annum. How much interest will be earned on a deposit of $1000 after 3 years?

Step 1: Identify the principal amount, which is the initial deposit. In this case, it is $1000.
Step 2: Identify the interest rate. The bank offers an interest rate of 6% per annum, which can be written as 0.06 in decimal form.
Step 3: Identify the time period for which the money is deposited. Here, it is 3 years.
Step 4: Use the formula for calculating interest: Interest = Principal * Rate * Time.
Step 5: Substitute the values into the formula: Interest = 1000 * 0.06 * 3.
Step 6: Calculate the interest: 1000 * 0.06 = 60, then 60 * 3 = 180.
Step 7: The total interest earned after 3 years is $180.

Simple Interest Calculation – The formula for calculating simple interest is Interest = Principal * Rate * Time.