A bank offers 5% simple interest per annum. How much interest will be earned on

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Question: A bank offers 5% simple interest per annum. How much interest will be earned on a principal of $2000 after 3 years?

Options:

Correct Answer: 300

Solution:

Interest = Principal * Rate * Time = 2000 * 0.05 * 3 = 300.

A bank offers 5% simple interest per annum. How much interest will be earned on a principal of $2000 after 3 years?

A bank offers 5% simple interest per annum. How much interest will be earned on a principal of $2000 after 3 years?

Step 1: Identify the principal amount, which is $2000.
Step 2: Identify the interest rate, which is 5%. Convert this percentage to a decimal by dividing by 100. So, 5% becomes 0.05.
Step 3: Identify the time period in years, which is 3 years.
Step 4: Use the simple interest formula: Interest = Principal * Rate * Time.
Step 5: Substitute the values into the formula: Interest = 2000 * 0.05 * 3.
Step 6: Calculate the interest: 2000 * 0.05 = 100, then 100 * 3 = 300.
Step 7: The total interest earned after 3 years is $300.

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