If $2000 is invested at a simple interest rate of 4% per annum, how much interes

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Question: If $2000 is invested at a simple interest rate of 4% per annum, how much interest will be earned in 5 years?

Options:

Correct Answer: $400

Solution:

Simple Interest = Principal × Rate × Time = 2000 × 0.04 × 5 = $400.

If $2000 is invested at a simple interest rate of 4% per annum, how much interest will be earned in 5 years?

If $2000 is invested at a simple interest rate of 4% per annum, how much interest will be earned in 5 years?

Step 1: Identify the principal amount (the initial investment). In this case, it is $2000.
Step 2: Identify the interest rate. Here, the interest rate is 4% per annum, which can be written as 0.04 in decimal form.
Step 3: Identify the time period for which the money is invested. In this case, it is 5 years.
Step 4: Use the simple interest formula: Simple Interest = Principal × Rate × Time.
Step 5: Substitute the values into the formula: Simple Interest = 2000 × 0.04 × 5.
Step 6: Calculate the interest: 2000 × 0.04 = 80, then 80 × 5 = 400.
Step 7: The total interest earned after 5 years is $400.

Simple Interest – The calculation of interest earned on a principal amount over a specific period at a fixed rate.