If a person invests $2500 at a simple interest rate of 3% per annum, how much in

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Question: If a person invests $2500 at a simple interest rate of 3% per annum, how much interest will he earn in 4 years?

Options:

Correct Answer: $200

Solution:

Simple Interest = Principal × Rate × Time / 100 = 2500 × 3 × 4 / 100 = $300

If a person invests $2500 at a simple interest rate of 3% per annum, how much interest will he earn in 4 years?

If a person invests $2500 at a simple interest rate of 3% per annum, how much interest will he earn in 4 years?

Step 1: Identify the principal amount (the initial investment). In this case, it is $2500.
Step 2: Identify the interest rate. Here, it is 3% per annum.
Step 3: Identify the time period for which the money is invested. In this case, it is 4 years.
Step 4: Use the simple interest formula: Simple Interest = Principal × Rate × Time / 100.
Step 5: Plug in the values: Simple Interest = 2500 × 3 × 4 / 100.
Step 6: Calculate the multiplication: 2500 × 3 = 7500, then 7500 × 4 = 30000.
Step 7: Divide by 100: 30000 / 100 = 300.
Step 8: The total interest earned after 4 years is $300.

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