Question: If a sum of money is invested at a simple interest rate of 7% per annum, how much interest will it earn in 6 years if the principal is $1200?
Options:
$504
$420
$600
$720
Correct Answer: $504
Solution:
Simple Interest = P * r * t = 1200 * 0.07 * 6 = $504
If a sum of money is invested at a simple interest rate of 7% per annum, how muc
Practice Questions
Q1
If a sum of money is invested at a simple interest rate of 7% per annum, how much interest will it earn in 6 years if the principal is $1200?
$504
$420
$600
$720
Questions & Step-by-Step Solutions
If a sum of money is invested at a simple interest rate of 7% per annum, how much interest will it earn in 6 years if the principal is $1200?
Step 1: Identify the principal amount (P). In this case, P = $1200.
Step 2: Identify the interest rate (r). The interest rate is 7%, which can be written as a decimal: r = 0.07.
Step 3: Identify the time period (t) in years. Here, t = 6 years.
Step 4: Use the simple interest formula: Simple Interest = P * r * t.
Step 5: Substitute the values into the formula: Simple Interest = 1200 * 0.07 * 6.
Step 6: Calculate the interest: 1200 * 0.07 = 84, then 84 * 6 = 504.
Step 7: The total interest earned in 6 years is $504.
Simple Interest Calculation – Understanding how to calculate simple interest using the formula SI = P * r * t, where P is the principal amount, r is the rate of interest, and t is the time in years.
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