A person invests $2000 in a stock that gives a simple interest of 6% per annum.

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Question: A person invests $2000 in a stock that gives a simple interest of 6% per annum. What will be the total amount after 3 years?

Options:

Correct Answer: $2400

Solution:

Total Amount = Principal + (Simple Interest) = 2000 + (2000 * 6/100 * 3) = 2000 + 360 = $2400.

A person invests $2000 in a stock that gives a simple interest of 6% per annum. What will be the total amount after 3 years?

A person invests $2000 in a stock that gives a simple interest of 6% per annum. What will be the total amount after 3 years?

Step 1: Identify the principal amount (the initial investment). In this case, it is $2000.
Step 2: Identify the interest rate. Here, it is 6% per annum.
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: Substitute the values into the formula: Simple Interest = 2000 * (6/100) * 3.
Step 6: Calculate the interest: 2000 * 0.06 * 3 = 360.
Step 7: Add the simple interest to the principal to find the total amount: Total Amount = Principal + Simple Interest.
Step 8: Substitute the values: Total Amount = 2000 + 360.
Step 9: Calculate the total amount: 2000 + 360 = 2400.

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