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 $2000 after 3 years?

Options:

Correct Answer: 300

Solution:

Simple interest = Principal * Rate * Time = 2000 * (5/100) * 3 = 300.

If a bank offers 5% interest per annum, how much interest will be earned on a deposit of $2000 after 3 years?

If a bank offers 5% interest per annum, how much interest will be earned on a deposit of $2000 after 3 years?

Step 1: Identify the principal amount, which is the initial deposit. In this case, it is $2000.
Step 2: Identify the interest rate offered by the bank. Here, it is 5% per annum.
Step 3: Identify the time period for which the money is deposited. In this case, it is 3 years.
Step 4: Convert the interest rate from a percentage to a decimal by dividing by 100. So, 5% becomes 0.05.
Step 5: Use the simple interest formula: Simple Interest = Principal * Rate * Time.
Step 6: Substitute the values into the formula: Simple Interest = 2000 * 0.05 * 3.
Step 7: Calculate the interest: 2000 * 0.05 = 100, then 100 * 3 = 300.
Step 8: 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.