If a bank offers 5% interest per annum, how much interest will be earned on a de

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Question: If a bank offers 5% interest per annum, how much interest will be earned on a deposit of $1,000 after 2 years?

Options:

Correct Answer: 100

Solution:

Interest = Principal * Rate * Time = 1000 * 0.05 * 2 = $100.

If a bank offers 5% interest per annum, how much interest will be earned on a deposit of $1,000 after 2 years?

If a bank offers 5% interest per annum, how much interest will be earned on a deposit of $1,000 after 2 years?

Step 1: Identify the principal amount, which is the initial deposit. In this case, it is $1,000.
Step 2: Identify the interest rate offered by the bank. Here, it is 5% per annum, which can be written as 0.05 in decimal form.
Step 3: Identify the time period for which the money is deposited. In this case, it is 2 years.
Step 4: Use the formula for calculating interest: Interest = Principal * Rate * Time.
Step 5: Plug in the values into the formula: Interest = 1000 * 0.05 * 2.
Step 6: Calculate the interest: 1000 * 0.05 = 50, then 50 * 2 = 100.
Step 7: The total interest earned after 2 years is $100.

Simple Interest Calculation – The formula for calculating simple interest is Interest = Principal * Rate * Time.