If a person invests $2500 at a simple interest rate of 12% per annum, how much i

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Question: If a person invests $2500 at a simple interest rate of 12% per annum, how much interest will he earn in 4 years?

Options:

Correct Answer: $1000

Solution:

Simple Interest = 2500 × 12 × 4 / 100 = $1200

If a person invests $2500 at a simple interest rate of 12% per annum, how much interest will he earn in 4 years?

If a person invests $2500 at a simple interest rate of 12% 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 12% per annum.
Step 3: Identify the time period for the investment. 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 × 12 × 4 / 100.
Step 6: Calculate the multiplication: 2500 × 12 = 30000.
Step 7: Multiply the result by the time: 30000 × 4 = 120000.
Step 8: Divide by 100 to find the interest: 120000 / 100 = 1200.
Step 9: The total interest earned in 4 years is $1200.

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