Question

How much simple interest would be earned on a certificate of deposit worth $2,000 over a period of 5years with an interest rate of 2%?

Answer 1

Answer:$200

Explanation:

Simple interest=(Principle×Rate×Time)/100

=(2000×2×5)/100

=$200

Answer 2

$200 will be earned on a certificate of deposit worth $2000 over a period of 5 years with an interest rate of 2%

Explanation:

Simple interest is applied on a amount as a whole. The interest is calculated for t time period where t is in years.

The simple interest is given by the formula:

`I = Prt`

Here P is the principal amount, r is the annual rate and t is time in years

Given

P = $2000

t = 5 years

r = 2%

Putting the values in the formula

`I = 2000 * 0.02 * 5 \\I = \$200`

Hence,

$200 will be earned on a certificate of deposit worth $2000 over a period of 5 years with an interest rate of 2%