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If a person invests $1000 at an annual interest rate of 5% for 3 years, what wil

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Question: If a person invests $1000 at an annual interest rate of 5% for 3 years, what will be the total amount at the end of 3 years using simple interest?

Options:

  1. $1150
  2. $1200
  3. $1050
  4. $1100

Correct Answer: $1150

Solution: 

Simple Interest = Principal × Rate × Time = 1000 × 0.05 × 3 = $150. Total Amount = Principal + Interest = 1000 + 150 = $1150.

If a person invests $1000 at an annual interest rate of 5% for 3 years, what wil

Practice Questions

Q1
If a person invests $1000 at an annual interest rate of 5% for 3 years, what will be the total amount at the end of 3 years using simple interest?
  1. $1150
  2. $1200
  3. $1050
  4. $1100

Questions & Step-by-Step Solutions

If a person invests $1000 at an annual interest rate of 5% for 3 years, what will be the total amount at the end of 3 years using simple interest?
  • Step 1: Identify the principal amount (the initial investment). In this case, it is $1000.
  • Step 2: Identify the annual interest rate. Here, it is 5%, which can be written as 0.05 in decimal form.
  • Step 3: Identify the time period for the investment. In this case, it is 3 years.
  • Step 4: Calculate the simple interest using the formula: Simple Interest = Principal × Rate × Time.
  • Step 5: Plug in the values: Simple Interest = 1000 × 0.05 × 3.
  • Step 6: Perform the multiplication: 1000 × 0.05 = 50, then 50 × 3 = 150. So, the simple interest is $150.
  • Step 7: Calculate the total amount at the end of 3 years by adding the simple interest to the principal: Total Amount = Principal + Interest.
  • Step 8: Plug in the values: Total Amount = 1000 + 150.
  • Step 9: Perform the addition: 1000 + 150 = 1150. So, the total amount at the end of 3 years is $1150.
  • Simple Interest Calculation – Understanding how to calculate simple interest using the formula: Interest = Principal × Rate × Time.
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